In this special episode, Ron and Brady address recent events that has altered the world as we knew it in a matter of months, and in one notable case, in one day. The emergence of Covid-19, the resulting mandatory restrictions to daily life, and televised tragic death of Mr. George Floyd, an unarmed African American man, at the hands of law enforcement has altered our collective understanding of security and racial equality in the U.S. In a moment of time that has been compared to the Civil Rights Movement, our very own Philip Qualo, Chairperson of the Phia Diversity Inclusion Committee, joins us to provide his perspective on these issues and the importance for Americans to unite in the face of tragedy. For industry leaders who may be uncertain on how to support their workforce in this “cancel culture” era, we also share some of our own internal approaches we have adopted that have not only been well received but actually celebrated by our staff and the industry as a whole. As racial disparities continue to persist in access to meaningful healthcare, resulting in grossly disproportionate outcomes for people of color, the escalating cost of healthcare in an increasingly diverse workforce, social justice and racial equality are conversations that can no longer be ignored or kept silent.
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As we remain hyper-focused on COVID-19, it is easy to forget other ongoing impactful industry events. Life goes on, and so too does lawmaking and litigation. Statutes, regulations, and case law have been and continue to be considered, debated, and finalized; resulting in serious, lasting effects. It behooves us all to track them accordingly. Luckily for you, The Phia Group’s legal team has done just that – and they will happily inform and advise on what to watch, and how to adjust. Join us for this free, but invaluable event.
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Nick Bonds, Esq.
As the Supreme Court of the United States wraps up its first full term with Associate Justice Brett M. Kavanaugh rounding out the Roberts Court’s conservative majority comes to a close, we have a number of high-profile opinions to dissect.
In addition to the customary tumult baked into an election year, this SCOTUS session deliberated while the coronavirus pandemic raged and the resurgent wave of Black Lives Matter protests swept the nation and the world. Amidst this background, the Court delivered opinions on issues as wide-ranging and politically charged as presidential powers, Native American sovereignty and land rights, faithless elector laws and the Electoral College, and Dreamers and immigration law. Of particular interest to employers and sponsors of health plans, were decisions regarding abortion rights, contraception coverage, and protections for gay and transgender employees. These latter cases will claim our spotlight for now.
In June Medical Services v. Russo, the Court struck down a Louisiana abortion law that was virtually identical to the Texas law it previously struck down in the 2016 case Whole Woman’s Health v. Hellerstedt by a margin of 5-3. The Louisiana law, like the Texas law before it, required doctors performing abortions to have admitting privileges at nearby hospitals, but had the effect of shuttering nearly every abortion provider in the state. In the 2016 case, a majority of the Court held that the law placed an undue burden on access to abortion. Chief Justice John Roberts dissented in the 2016 decision, and supporters of the Louisiana law hoped that the new lineup on the Supreme Court’s bench would deliver them a victory this term. Chief Justice Roberts disappointed them, however, relying on the legal principal of stare decisis and falling back on the precedent established by the 2016 case to rule against the nearly identical Louisiana law in a 5-4 decision.
The Court’s big case on contraception coverage was the culmination of a seven-year legal battle known as Little Sisters of the Poor v. Pennsylvania. In a 7-2 (arguably a 5-2-2) decision, the Supreme Court upheld a regulation from the Trump administration that essentially exempted employers who cite religious or moral objections from the Affordable Care Act’s contraceptive coverage mandate. Writing for the majority, consisting of the Court’s conservative bloc, Justice Clarence Thomas held that the Trump administration was acting within its authority to provide exemptions for employers with “religious and conscientious objections.” Justices Elena Kagan and Stephen Breyer agreed with their conservative colleagues that the Trump administration had the authority to create these exemptions, but they reasoned that lower courts should examine whether the decision was “arbitrary and capricious” and invalid under the Administrative Procedure Act. Justice Ruth Bader Ginsburg, joined by Justice Sonya Sotamayor, wrote a fiery dissent, arguing that the Court failed to balance religious freedom with women’s health. As a result of the Court’s ruling, employers objecting to the coverage of contraceptives on religious or conscientious grounds may decline to cover contraceptives for their employees, and the Obama-era accommodation process that would still allow employees to access contraceptives without cost-sharing, is now optional.
Lastly, in a 6-3 decisions, the Court ruled that the Civil Rights Act of 1964 protects gay and transgender workers from discrimination in the workplace. Justice Neil Gorsuch wrote in Bostock v. Clayton County that Title VII of the Civil Rights Act prohibits employers from firing their workers for being gay, bisexual, or transgender. Justice Gorsuch took pains to make clear that the Court’s decision in Bostock was specifically targeted on Title VII and no other federal laws prohibiting discrimination “on the basis of sex,” but the Court’s rationale here will almost certainly echo into other litigations debating the application of that key phrase in other areas of law. Though the issue in Bostock was the hiring and firing of LGBTQ employees, the case has implications for employer’s health and benefit offerings and is likely to be at the heart of future litigation in this arena.
All of these rulings will be making their effects felt over the coming months, both practically and politically. We are here to help and ready to answer any questions stemming from these decisions.
In this episode of the Empowering Plans podcast, Ron and Brady briefly discuss Phia's new headquarters in Canton, MA. Then, they jump into a discussion about recent high-profile court cases that could shape our industry: from requiring hospitals to post their negotiated rates with insurers online to the Trump administration's latest action in the Supreme Court case that could spell the end of the entire Affordable Care Act.
By: Philip Qualo, J.D.
Just when the United States was starting to adjust to a new COVID-19 reality, where bejeweled face masks, social distancing and hand sanitizer have become as fundamental to our existence as water, current events have yet again set us down a new trajectory in these unprecedented times. The May 25th murder of George Floyd, a Black man who was unarmed and handcuffed at the time of his death at the hands of law enforcement sparked a series of national protests that has called on the world to reexamine policies and practices that disproportionately impact people of color. The protests have spawned into a national movement in the U.S. that has aimed at reforms in law enforcement practices and legislative accountability. There is a very important arena, however, where racial disparities are not being discussed at this time, and that is in healthcare. Disparate access to affordable, yet effective, healthcare has and continues to have disproportionately negative impact on people of color. In most cases, access to healthcare can be the difference between life and death.
Despite the passage of the Affordable Care Act in 2010, racial disparities in healthcare continue to be a troubling phenomenon in the U.S. Black men and women face 40 percent and 57 percent higher hypertension rates than White men and women, respectively. The death rate from breast cancer for Black women is 50 percent higher than for White women. On average, 25 percent of Latinx children aged 6–11 years are considered obese, compared to 11 percent of White children. Asthma prevalence is also highest among Black and Native American communities, and Black children have a 260 percent higher emergency department visit rate and a 500 percent higher death rate from asthma compared to White children. Native American, Latinx, and Black communities have the highest percentages of adults with diabetes.
Even more troubling, the infant and maternal mortality rates for Black babies and mothers are far higher than those of White babies and mothers. In the U.S., based on 2016 data, White babies die before their first birthday at a rate of 4.9 per 1,000, and White women die from pregnancy and childbirth-related causes at a rate of 13 per 100,000. While those numbers are far higher than other wealthy countries, the picture is far worse for Black babies and mothers. Black babies die before their first birthday at a rate of 11.4 per 1,000, and Black moms die from childbirth-related causes at a rate at a rate of 42.8 per 100,000 – more than double and triple the rates of White babies and moms, respectively.
There is no one solution that can fix this problem. Recognizing that these disparities exist, is something we all must do before we can contemplate how to remedy this systemic issue. In reviewing these troubling statistics, the only solace I find is an overwhelming feeling of being blessed to work for The Phia Group. At Phia, ensuring every American is insured is not enough; we are firm in our belief that we need to reduce the cost of care at a national level. Racial disparities in healthcare will continue to grow with escalating costs, as low income minorities struggle to maintain equal access to affordable coverage and basic healthcare that would likely identify many of the above listed health issues before they grow into lifelong, chronic, and costly conditions. As workforces are growing more and more diverse by the day, this is certain to be a reality to many employers that offer health coverage to their employees. Therefore, improving racial inequality is not only a matter of civil rights, but a matter that must be taken seriously by the healthcare industry in our collective efforts to keep costs low, and access to coverage affordable for all.
Join The Phia Group’s team of experts as they discuss familiar issues such as balance billing, surprise billing, mental health parity, telemedicine, COB, and others, while framed in the context of these unique times. How has COVID-19 changed these issues, if at all? How is the new employer environment exposing these issues? Listen in to find out what The Phia Group has to say!
By: Jon Jablon, Esq.
In this strange time (strange because of both COVID-19 and the state of self-funded in general), things move at – to quote our CFO/CIO Joe Montalto – “the speed of business.” Candidly, I have never really been sure what that means, despite my smiling and nodding when he says it, but I think it’s a euphemism for “fast.” Things move fast. And you can quote me!
How that manifests in our industry, in Phia’s experience, is that sometimes, a client needs certain services performed ASAP. There may not be time to receive an agreement, review it, collaborate with peers, make changes, have those approved by the vendor, and run a final version by upper management prior to the performance of the services. Certain vendors such as stop-loss carriers are extremely unlikely to proceed without written agreements either due to applicable law or liability concerns, but many vendors will happily begin performing services on no notice when their clients really need it.
It can certainly be potentially dangerous, since contracts are, after all, designed to protect the parties – but from a practical standpoint, relationships like this can be usually be handled in one of a few ways:
Standard industry practice
This is a method of interpretation of an implied contract where both parties act in accordance with what usually happens in the industry with respect to relationships like the one in question. Principles such as “fair market value” apply, where the vendor can’t decide to gouge the client just because no one has explicitly agreed to the fees. Standard industry practice is viewed as “the norm” – what a reasonably buyer and seller of services would reasonably expect their respective rights and obligation to be.
An unsigned service agreement
Numerous times, I have emailed a draft template service agreement to a TPA or broker that needed a medical claim negotiated ASAP. No time to review the contract – just enough time to email the claim and get it settled that day. While we could have relied on the aforementioned standard industry practice to govern the relationship, I prefer to send a copy of the contract that can be reviewed prior to, or even during, the performance of the services, so the client knows exactly what to expect. By saying “here are our terms; by asking us to perform this service sans contract, these are the terms that would have governed, and therefore we operating as if this contract were signed,” we can lay out our pricing and other terms so there can be no question of the details after the fact, and so we won’t need to look to what might be “standard” in the industry – especially since different entities may have different ideas, or experiences, of what is actually standard.
A previous agreement between the parties
Sometimes a vendor continues to perform a service after an existing contract has terminated. Runout can be specified in the agreement, in which case you likely need to look no further than the agreement’s terms – but without runout, if the agreement is truly terminated, and the vendor agrees to perform additional services anyway, it will generally be the case that the prior agreement can govern the relationship, since both parties were at the time aware of the other party’s conditions. Obviously a particularly old service agreement can’t necessarily be relied on – but the more recent the execution of the terminated agreement, the more likely the parties are to be willing to agree on the same terms.
Without a signed service agreement, some things can be left up in the air, so it’s always a best practice to memorialize any business agreement in writing to the extent possible – but when things are truly moving “at the speed of business,” sometimes you have to rely on the industry, an unsigned contract, or even a terminated contract.
If you want a second set of eyes to try to figure out a complex relationship between a health plan, TPA, or broker and another health plan-related vendor, don’t hesitate to ask The Phia Group’s experts, at PGCReferral@phiagroup.com.
By: Nick Bonds, Esq.
Summer is officially here, and employers and employees alike are all wondering if, when, and how to go back to the office. After a spring spent cooped up at home self-isolating and social distancing, many are eager to get back into their old routine, to reclaim some sense of normalcy. While we can all certainly sympathize with that sentiment, the specter of the coronavirus still looms large. To safeguard our collective health and sanity, we all have a responsibility to ensure that a return to office life is handled carefully, lest we experience a resurgence in cases and find ourselves cloistered in makeshift home offices for many months more.
The ideal solution is a vaccine, but that goal will likely not be realized until sometime in early 2021. Once a vaccine is created, there may still be delays in producing and distributing doses to Americans and the rest of the world, further delaying a return to something resembling the before times. To return to our workplaces sooner, the search continues for more immediate solutions.
Many employers, Phia included, have been putting a tremendous deal of thought into the question of how to get employees back in the office while ensuring their health and safety. We’ve implemented a number of measures to minimize risk, such as limiting the total number of people in the office, providing masks and hand sanitizer to employees, checking temperatures as people enter the building, and posting a tremendous amount of informative signage around the office reminding people to keep their distance, cover their faces and wash their hands.
Some employers have sought more elaborate, technological solutions. A number of health and symptom-checking apps have sprung onto the scene, promising to measure employees’ health status and stave off potential workplace outbreaks. Some of these technologies are fairly straightforward, like social-distancing wristbands that buzz when those wearing them get too close to one another. In the right setting, such a device could certainly keep people mindful and help limit vectors of transmission. Other technologies are both more complex and more invasive. Smartphone apps that track employees’ location and act as near-continuous contact tracers, and biometric scanners that monitor for symptoms as employees move through the workplace. Far from Bradbury-esque MacGuffins, these technologies may become the new normal for many employees.
An alternative approach has been to ramp up antibody testing among the workforce, aiming to bring in those employees who have already been exposed to the virus and are (hopefully) immune. The fear with this approach is that it could inadvertently create a two-tiered economy, implicitly valuing employees who have been infected over those who have yet to be exposed. This could even create a perverse incentive, encouraging employees to actively seek to infect themselves as a pathway to returning to work, one of the many reasons that the World Health Organization discourages the “immunity passport” approach.
While none of these strategies can guarantee a virus-free workplace, they can certainly keep us all mindful and encourage best-practices. But at worst, these technologies implicate fundamental privacy concerns, which employers must be aware of. Obvious regulatory landmines for employers come in the form of laws like HIPAA and the ADA, which protect employees’ sensitive health information data. Agencies like the HHS’s Office of Civil Rights and the EEOC have weighed in, offering updated guidance to employers on how to balance employee privacy with maintaining a safe work environment amid the pandemic.
As more workplaces begin reopening, employee safety is a top concern, but privacy requirements cannot be forgotten. Employers must ensure their approach to reopening is a balanced equation, accommodating their business needs as effectively as possible while keeping their employees healthy and their health information secure.
By: Philip Qualo, J.D.
The Nation’s response to the COVID-19 pandemic called on employers to exercise greater flexibility and understanding for employees impacted by COVID-19. For the most part, the series of legislations enacted since the pandemic hit the U.S. have been aimed at expanding unemployment, group health plan coverage, leaves of absence, and providing financial support to struggling employers and Americans faced with an economy that evaporated overnight. However, plan sponsors offering benefits on a pre-tax basis through Internal Revenue Services (IRS) Section 125 cafeteria plans struggled to correlate the nationwide call to provide flexible options employees with the strict terms of their cafeteria plans.
Section 125 cafeteria plans are required to maintain employee pre-tax elections for benefits offered through the plan for the full plan year, with very few exceptions. The type of benefits offered through a cafeteria plan generally include employer-sponsored health coverage, Health Flexible Spending Arrangements (Health FSAs) and Dependent Care Assistance Programs (DCAPs). The IRS also imposes strict limitations on when midyear changes to those elections may be made. As employers have been forced to deal with mandatory shutdowns, furloughs, and newly enacted leave requirements, most plan sponsors found themselves with little guidance on how to handle requested changes to elections made before COVID-19 became a household name.
After much anticipation, the IRS finally released much needed guidance on May 12, 2020. In IRS Notice 2020-29, the IRS provides for increased flexibility with respect to midyear elections under a Section 125 cafeteria plan during calendar year 2020 due to COVID-19. The Notice applies to cafeteria plans that offer employer-sponsored health coverage, FSAs and DCAPs. The Notice permits an employer to amend its cafeteria plans to allow employees to:
Notice 2020-29 does not require cafeteria plans adopt these midyear elections. An employer that decides to amend their cafeteria plan to allow for any of the above midyear election changes must adopt a plan amendment. It should be noted that any amendment to a cafeteria plan made under pursuant to the Notice is only valid through December 31, 2020.
It is important to note that an employer is not required to provide unlimited election changes but may, in its discretion, determine the extent to which such election changes are permitted and applied, provided that any permitted election changes are applied on a prospective basis only, and the changes to the plan's election requirements do not result in failure to comply with the nondiscrimination rules applicable to Section 125 cafeteria plans.
In determining the extent to which midyear election changes are permitted and applied, an employer may wish to consider the potential for adverse selection of health coverage by employees. To prevent adverse selection of health coverage, an employer may wish to limit elections to circumstances in which an employee's coverage will be increased or improved as a result of the election.
By: Andrew Silverio, Esq.
As the days in isolation continue to stretch into weeks and eventually months, it seems there is no industry or business that has not been impacted by the COVID-19 pandemic. But a recent report released by the American Hospital Association (available at https://www.aha.org/guidesreports/2020-05-05-hospitals-and-health-systems-face-unprecedented-financial-pressures-due) reveals a significant financial impact on hospitals and health systems, entities which are truly on the front lines of the fight against COVID-19. This may seem counterintuitive – one might expect that a massive public health event like a viral pandemic would result in an influx of business and corresponding increase in revenues for hospitals and other providers. However, the report outlines various ways in which these providers are suffering significant losses – estimated at $202.6 billion over four months, or $50.7 billion per month.
First, many Americans sheltering in place and reluctant to risk exposure to the virus are canceling or postponing standard care, and shortages of protective equipment and crucial drugs have forced providers to incur increased cost to secure these materials. Additionally, the sudden and historic surge of unemployment has led to a corresponding rise in uninsured patients. Despite government efforts to expand access to COBRA coverage, these efforts have not impacted the cost of coverage itself, and it can still be prohibitively costly, especially for the newly unemployed.
The report itself provides a much more in-depth analysis of the impact of these factors, and I encourage reviewing it in full (with a grain of salt, as the AHA is ultimately an advocacy organization). Taken at face value, it remains to be seen what the ultimate impact on payers will be. Certainly some of this expense will be passed on to payers directly, for example increased supply costs for drugs and medical equipment, but more indirect and widespread impact is likely as well, for example if providers make concerted efforts to be more aggressive with billing and collections do to the increase in uninsured patients, or are forced out of operation, reducing healthcare options overall. For example, CNN outlines at https://www.cnn.com/2020/04/21/us/coronavirus-rural-hospitals-invs/index.html the disparate impact on rural hospitals, many of which are being forced to close down as the sudden and almost complete end of routine care is not accompanied by a corresponding surge in COVID-19 patients. In communities with few healthcare options, the loss of a single hospital can be disastrous, with no competitive incentive remaining for the surviving providers to reasonably limit their charges or ensure the quality of care beyond what’s necessary to manage direct liability.