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Drug Pricing Still on the Ballot in 2020

On September 24, 2020

By: Nick Bonds, Esq.

I doubt I am alone in feeling that 2020 has already crammed in roughly a decade’s worth of health crises, and we still have months to go. From murder hornets to the ever-present threat of the coronavirus, from wildfires turning the West Coast skies orange to so many hurricanes we are running out of names; our collective physical, mental, and emotional health has been through the ringer this year. Not to mention the tumbling dominoes of economic impacts wrought by all of the above, which by itself can have a substantial impact on our health.

The cost of prescription drugs, already high even before 2020 built up a head of steam, continues to be a source of financial pain for American households. Nearly 30% of Americans have reported not taking their prescription medicine as directed due to its cost. This is one of the most glaring examples of individuals’ medical decisions being driven not by medical judgment, but by financial circumstance. 

At the beginning of the year, prescription drug prices ranked top among the “pocketbook” issues most primary voters were focused on. Though the debate around Medicare for all became a clear fault line among the Democratic presidential nominee hopefuls, virtually all the candidates threw their support behind a plan to give Medicare authority to negotiate drug prices with manufacturers. They also tended to favor plans to facilitate importation of cheaper medications from overseas and reigning in drug makers’ penchant for manipulating the patent system to artificially delay development and marketing of low-cost generic drugs.

Since clinching the Democratic nomination, Vice President Biden’s stance on drug pricing reform has come into sharper focus. The Biden-Sanders “unity task force” published a detailed list of policy recommendations, including a plan for “bringing down drug prices and taking on the pharmaceutical industry.” The primary prongs of which include empowering Medicare to negotiate drug prices, pushing to keep drug price increases in line with inflation, capping prescription costs for seniors, and cracking down on anti-competitive practices among drug manufacturers.

Not to be outdone, President Trump recently announced a “hail Mary” effort on drug prices, signing his “Executive Order on Lowering Drug Prices by Putting America First” on September 13. Ostensibly, this order is designed to bring down domestic prices for prescription drugs by tying what Medicare pays for prescription drugs to the “most-favored-nation price” of those same drugs abroad. Specifically, capping Medicare’s rate to the lowest price for a pharmaceutical product that drug maker sells in a member country of the Organization for Economic Cooperation and Development (OECD).

It seems unlikely that this plan could be effectively implemented before the upcoming election, but it does show that the President still sees prescription drug prices as a viable campaign issue, even after campaigning on it in 2016 and hitting mostly dead ends in his efforts to address the issue in his first term. Recent polling shows that drug pricing remains one of the few healthcare issues where the President outstripped his Democratic challenger, and the President’s most-favored-nations policy appears to resonate among his base.

Whomever lands behind the Resolute desk in 2021, we can be sure that drug pricing reform will be high on their agenda. In the meantime, everyone stay safe, stay healthy, and be ready to vote on November 3.

Benefits on the Ballot – A Political Update for Health Benefits Professionals

On September 22, 2020

Election season is underway.  The future of healthcare will be decided via the ballot box, court rooms, and congressional halls.  Pandemic or no pandemic, the gears of democracy are turning and what happens now will have long term effects for us all.  Join The Phia Group as they discuss the most important elections (including candidates’ positions on health), ongoing legal cases, and proposed laws.  They will dissect each and provide you with not only thoughts on how they may impact us, but how we can best prepare for likely outcomes.

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New Guidance on HIPAA – Using PHI to Contact Recovered COVID-19 Patients Regarding Plasma Donation

On September 21, 2020

By: Andrew Silverio, Esq.

Recently, the Department of Health and Human Services released updated guidance outlining some permissible uses of Protected Health Information (PHI) under HIPAA in regard to recovered COVID-19 patients (available at  This guidance, which applies to health care providers, health plans, and their business associates, is an expansion of previous guidance which applied only to health care providers.

In essence, the guidance provides that these entities can use PHI to identify and contact individuals who have recovered from COVID-19 in order to inform them about how to donate their plasma, which will contain antibodies to SARS-CoV-2 which are useful in potentially treating COVID-19 patients. This activity has been classified as falling within the category of “health care operations,” and thus PHI can be used for this purpose without an individual’s authorization. 

HHS outlines that these activities constitute “health care operations” in that “facilitating the supply of donated plasma would be expected to improve the covered health care provider’s or health plan’s ability to conduct case management for patients or beneficiaries that have or may become infected with COVID-19.”  In regard to a health plan (as opposed to a particular provider who may use collected plasma itself to treat other patients), this justification’s connection to the “health care operations” of the specific covered entity seems tenuous.  It is difficult to see how, for a health plan as opposed to a provider, an interest in increasing the availability of antibody-containing plasma generally actually furthers the “health care operations” goals of the particular plan.  However, the public interest rationale here is crystal clear.

The guidance does come with an important caveat – the use of PHI for this purpose is only permitted to the extent that the outreach does not constitute marketing, which HHS outlines as “a communication about a product or service that encourages the recipient of the communication to purchase or use the product or service.”  This should not be an issue for plans, but providers likely have to walk a fine line when they provide the services in question.

Empowering Plans: P90 - IRS Notice 2020-29, COVID-19 and Cafeteria Plans: Self-Funded Plans Beware!

On September 15, 2020

The COVID-19 pandemic has brought about an unprecedented wave of federal legislation in a short period of time specifically aimed at regulating employer-sponsored group health plan coverage. Similarly, the Internal Revenue Service (IRS) has followed suit and released several formal Notices aimed at extending COVID-19 relief options to cafeteria plans. In the most recent notice issued by the IRS, however, IRS Notice 2020-29, there are certain provisions that impact employer-sponsored coverage. If adopted by a cafeteria plan sponsor that also sponsors a self-funded health plan, these provisions can result in significant cost liability for the plan and create issues for stop-loss reimbursement.

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An Overview of the Recent New York Federal Court Decision and its Potential Impact Moving Forward

On September 9, 2020

By: Kevin Brady, Esq.

In April of this year, following the passage of the Families First Coronavirus Response Act (FFCRA), the State of New York sued the Department of Labor (DOL), claiming that several provisions of the FFCRA exceeded the DOL’s authority under the statute.

On August 3rd, the United States District Court of the Southern District of New York issued an opinion, siding with the State of New York and invalidating several provisions of the FFCRA. Specifically, the court invalidated the following regulations:

  1. The “work-availability” requirement

Under the FFCRA regulations, individuals are not eligible for Emergency Family Medical Leave or Emergency Paid Leave if their employer does not actually have work for the individual to do. The court concluded that the DOL failed to properly explain this additional requirement, and invalidated the regulation.

  1. Employer approval of intermittent leave

Under the FFCRA regulations, employees are required to have approval from their employer in order to take leave under the FFCRA intermittently. The court opined that this was not permissible and vacated the regulation.

  1. Requirement to provide documentation of leave in advance

Employees are required to provide documentation regarding the reason for leave and the requested duration of leave, prior to taking leave under the FFCRA. The court reasoned that this regulation is inconsistent with the statute and struck the regulation down.

  1. The DOL’s definition of “health care provider”

Under the regulations, employers are permitted to exclude health care providers from the leave entitlements granted under the FFCRA. The DOL’s definition of the term “health care provider” is broad and can be interpreted to include individuals who are only tangentially related to actually providing health care. The court reasoned that the exclusion of leave entitlement for health care providers is intended to apply only to those individuals who are capable of providing healthcare services.

Potential Impact

While the court’s ruling may ultimately have a significant impact nationwide, it appears that (at least for the time being) the application of the ruling will be confined to employers in the state of New York, as the court did not specifically address whether the ruling would apply nationally. At this point, the ball is in the DOL’s court. If the DOL’s complies with the ruling, we are likely to see significant changes to the FFCRA regulations and guidance. These changes are important and may drastically increase the rights of employees looking to take leave. In the alternative, the DOL may appeal the ruling, in which case the impact may be in limbo for some time. In the meantime, employers should review their current policies and their administration of FFCRA, as well as keep their eye out for the DOL’s next steps to ensure compliance with the FFCRA leave provisions.

Empowering Plans: P89 - Healthcare Policy at the DNC/RNC

On September 2, 2020

In this episode of Empowering Plans, Ron and Brady assess what we learned from the candidates on healthcare policy at the virtual Democratic and Republican national conventions. Over the course of two weeks, both parties showcased their platforms; one focused heavily on restoring the Affordable Care Act and a nationwide COVID-19 response, and the other on lowering prescription drug prices and covering all pre-existing conditions. What can our industry learn from the talking points? Join us as we cover all the angles and discuss what comes next as the presidential election draws ever closer.

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Plan Mirroring: What Does It Really Mean?

On August 26, 2020

By: Jon Jablon, Esq.

We hear a lot of chatter in the self-funded industry about “plan mirroring.” The idea is that a stop-loss carrier will adopt the same language as what is in the SPD, in effect “mirroring” the language, and that gets rid of what we at Phia like to call “hard gaps,” where the plan and carrier are working off different language, leading to situations where the plan must pay claims but the carrier may deny them. The point of mirroring the SPD’s language is so the plan never needs to worry about those kinds of gaps.

But there are other kinds of gaps, too. Gaps tend to arise when different entities are interpreting the same language, as well (we call those “soft gaps”) – and it is crucial to keep in mind that a policy that mirrors the plan’s terms is not the same as the carrier adopting the plan’s interpretation of those terms.

Let’s talk about an example. We have mentioned this particular situation numerous times; it’s not because we’re too lazy to think of new examples, but because it keeps on happening! The SPD excludes any benefits paid for services performed by a family member. A plan member has a great uncle who is a surgeon, and elects to have him perform the surgery partially because of the great price he has offered, and partially because he knows and trusts him. As far as the plan member is concerned, this is a win-win. The claim is sent to the health plan, and the Plan Administrator uses its discretion to determine that “family member” does not include someone as attenuated as a great uncle (since the Plan Administrator interprets that term “family member” to refer to the immediate family), so the plan pays the claim, and expects that the carrier will agree, since the policy “mirrors” the plan.

Well, you can guess what happens next.

The claim goes to the stop-loss carrier, and the carrier denies the claim because its interpretation of “family member” is broader than the Plan Administrator’s interpretation, indeed including great uncle within the class of “family members.” The carrier denies the claim. The plan is both confused and angry, and thus begins a protracted fight between the plan/TPA/broker and the stop-loss carrier, caused by the carrier’s overly-salesy and idealistic explanation to the plan, TPA, and broker what mirroring actually entails.

In short, plan mirroring entails using the same language, but it does not necessarily entail thinking the same things. The carrier adopted the same exclusion that the plan uses, but the carrier cannot control how the plan interprets that exclusion, nor can the plan be underwritten based on what interpretations of the plan language the Plan Administrator could conceivably make in the future. The carrier, after all, is not a psychic – and because of that, it is the carrier’s responsibility to make absolutely sure the health plan understands what “mirroring” really entails, and what it doesn’t entail. The concept of plan mirroring in a stop-loss policy is not quite as straightforward and magical as it seems. It is certainly useful to minimize the gaps in the language used, but it’s not a panacea.

This applies just as clearly, if not more so, in the level-funded arena, where level-funded plans expect to have their expenses capped based on a guarantee that the carrier will cover all their claims above the aggregate deductible. When there is a difference in interpretation that leads to a denial, the plan is left holding the bill, and often has no idea why – especially when level-funded plans are marketed essentially as programs that mimic fully-insured policies. The important difference is that in a fully-insured policy, the plan sponsor pays its monthly premium and there is no possibility of being on the hook for claims – whereas in a level-funded program, the plan sponsor can lose its expected reimbursement if the stop-loss carrier doesn’t agree with the Plan Administrator’s discretionary decision.

Plan mirroring provisions are sometimes marketed to make a stop-loss policy airtight for the plan, but don’t be fooled by the hype: there is always still the potential for a gap somewhere along the way. Make sure you read and understand your contracts and policies before you sign, and if possible, have them reviewed by an expert!


On August 24, 2020

By: Nick Bonds, Esq.

As the worldwide coronavirus crisis continues to grind on, impacting virtually every aspect of our lives, we have necessarily become familiar with the many pieces of legislation passed by Congress in its attempts to soften the blow to our country’s economic and healthcare systems. This has engendered a whole new can of alphabet soup: CARES, FFCRA, EFMLEA, EPSLA, PPP. Enacted late spring/early summer, these legislations have become staple pieces of the daily conversation in the arena of health benefits for employees. They’ve nearly begun to blend in with the furniture.

But as we are all keenly aware – these pieces of legislation were not designed to be permanent. Many of these temporary rules are set to expire by the end of 2020, with a number of the key components like the payroll protection program, already lapsing, many of us are looking back to Capitol Hill and wondering if and when more economic aid will be coming.

Democrats in the House of Representatives put together a follow-up aid package in May. Clocking in at roughly $3 trillion ($8 billion more, give or take, than its predecessor), the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would echo much of the relief provided in the CARES Act. Direct stimulus checks to individuals, enhanced unemployment benefits, and in some ways would go even further by expanding the PPP and employee tax credits, expanding eviction protections, providing hazard pay to for essential workers, and allocating billions to assist schools and universities reopen safely.

Though the HEROES Act passed quickly in the House, the Republican-controlled Senate was reluctant to take up the legislation. Balking at the $3 trillion price tag, and perhaps holding out hope that the coronavirus would indeed recede in the warmer summer months and render further economic aid unnecessary, the Senate has finally put together its own approach to a new round of economic stimulus: the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act. Unveiled on July 27, the HEALS Act clocks in at a (relatively) svelte $1 trillion – putting a fairly clear number on just how far apart the two sides are in reaching a compromise.

The HEALS Act includes many of the provisions that proved so popular in the CARES Act: direct “economic impact” payments to individuals with money for dependents as well, enhanced (though significantly reduced) unemployment benefits, and expansions to the PPP and employee tax credit. The HEALS Act dodges some of the assistance provided under the HEROES Act: it is silent regarding eviction protections, provides less support for higher education institutions, and makes its aid to K-12 schools dependent upon their reopening. To Senate Republicans’ credit, the HEALS Act does address a number of things not touched on by either the FFCRA or the HEROES Acts. Namely, the HEALS Act provides $16 billion for coronavirus testing, introduces a potential “return to work” bonus for unemployed workers who secure new employment, and it contemplates a 5-year liability shield.

This last component, encapsulated within the SAFE TO WORK Act (a component of the HEALS Act), is likely of the greatest interest to employers. The bill is designed to shield businesses, schools, nonprofits, government agencies, and other organizations from coronavirus-related lawsuits, so long as they take “reasonable” efforts to follow public health guidelines and manage to avoid grossly negligent or intentional acts of misconduct.

Congress has yet to reach a deal on the next aid package, but there are many components on the table that could do a lot to help Americans through the next leg of this crisis, employees and employers alike. We’ll keep a weather eye on the legislation as it develops.

Conflicts Abound – Providers & Facilities Fight Back

On August 17, 2020

U.S. hospitals have lost over $200 billion from March to June as a result of canceled services due to the COVID-19 pandemic. In response, providers have changed their tactics. They are raising prices, appealing more denied claims, more aggressively fighting referenced-based pricing, and stepping up collections efforts. Now, more than ever, it is imperative for plans and their partners to be vigilant and protect their members and plan assets. Join The Phia Group’s team as they discuss these new aggressive tactics as well as the conflicts they are causing with networks and stop-loss.

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Returning to Work Safely and Smartly. Who Bears the Cost?

On August 13, 2020

By: Bryan M. Dunton

Earlier this year, the coronavirus swept through the country and became such a major concern that employers shut down their physical offices and moved their operations remote. Not long after, states began mandating shutdowns and shelter-in-place orders. The overarching theme focused on how to keep everyone safe.

Now, months later, states and employers have begun to relax those restrictions by reopening, albeit in phases. With that, employees have slowly been allowed to return to work in traditional office settings. Given that employers have an interest in the wellbeing of their employees, and would likely face significant business consequences in the event of an outbreak at their place of business, some employers have implemented mandatory return-to-work testing for those employees who come back to the physical office space. On the national level, we have seen this approach implemented in major sports leagues such as the NFL, NBA, and MLB. The idea is essentially to test everyone who enters the building, regardless of whether they are displaying symptoms or have had known exposure.

The expansion and implementation of mandatory return-to-work testing has led to an interesting issue for plan administrators; who bears the cost of covering these tests?

While the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) require health plans to cover the cost of testing for COVID-19, with no cost-share to the participants, during this declared emergency, many plans are asking if they must pay the cost of the employer-mandated return-to-work testing. Seeing as testing costs vary wildly from $20-$850 (or more) per test, and an overall estimated nationwide cost of $6-25 billion annually, we can certainly see why health plans are concerned.

Section 6001 of the FFCRA, as amended by section 3201 of the CARES Act stipulates that in vitro diagnostic testing for COVID-19 must be covered, with no cost-share to participants. Further, this mandate applies to most group health plans, including self-funded plans. The Centers for Disease Control (CDC) recommends testing for the following five populations of people:

  • Individuals with signs or symptoms consistent with COVID-19
  • Asymptomatic individuals with recent known or suspected exposure to control transmission
  • Asymptomatic individuals without known or suspected exposure for early identification in special settings
  • Individuals being tested to determine resolution of infection (i.e., ensuring someone is no longer infected)
  • Individuals being tested for purposes of public health surveillance for COVID-19

Most of these categories deal with either asymptomatic individual or someone who may have been exposed to the virus. The Department of Labor (DOL) issued additional guidance in late June 2020 to clarify that the FFCRA and CARES Act mandate to cover the cost of COVID-19 testing only applies when the testing is medically appropriate. It further clarifies that testing “not primarily intended for individualized diagnoses or treatment of COVID-19” is not within the scope of section 6001.

So here we are. What should a plan do if an employer mandates return-to-work testing for its employees?

You might be surprised by this, but the answer is: it depends. Return-to-work testing is not typically ordered by an attending physician who deems the test medically appropriate for the patient. Rather, it is ordered by the employer, most likely for purpose of public health surveillance to help diagnose individuals in the workplace. This approach can ensure prompt and proper treatment to prevent creating a hot spot and spreading the virus. Some group health plans have opted to cover the return-to-work testing as a precautionary measure to help mitigate the costs of having to treat a larger pool of participants that may become infected with COVID-19.

Plans and employers should also consider any respective state mandates and obligations which may create additional circumstances where testing would be covered. As a final consideration, some mandates could also create a situation where an employer must cover certain testing even if it is not something where the cost can be passed on to the health plan.

Most self-funded group health plans are following the spirit of the law, and we recognize this is a difficult area to navigate as guidelines and mandates are evolving frequently while we all learn more about the virus. Here at the Phia Group, we welcome the opportunity to consult and help self-funded plans contain their costs and ensure the safety and well-being of their participants.