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Phia Group Media

Texas C.P.R.C. c. 140: The New Standard for Subrogation Rights

On September 17, 2014
Texas health plans seeking reimbursement via subrogation, are now forced to deal with new guidelines. C.P.R.C. c. 140, governing subrogation, went into effect January 1, 2014; enacting H.B. 1869, which was passed months prior; but the finer points are still being explored.

Who Does This Affect?

The new law impacts municipal health and retirement plans and fully insured health plans; (policies and plans where state law is not exempted by ERISA).  Medicare, Medicaid/CHIP, workers’ compensation, and private self funded ERISA plans are not affected.

What’s Changed?

Chapter 140 limits benefit plan subrogation to half of the plan member’s total recovery.  If the plan member is represented by counsel, this rule further requires plans to “reasonably” contribute to the attorney’s fee, (usually one third of the share).  In practice, this results in a three way split of the total funds recovered.

The rule seems to limit a benefit plan’s rights, but The Phia Group recognizes benefits of this new law as well, such as the elimination of Texas’ made-whole rule.

What Does This Mean For Affected Plans?

Other elements have yet to be fully explored by the courts.  For example, the cap imposed on subrogation and reimbursement interests (up to one half of the total recovery) is a “communal cap”, meaning that if there are multiple entities claiming reimbursement rights, their combined recoveries are capped at one half of the member’s recovery. The law does not address how funds are to be allocated between the respective interests in such a case. How can you ensure your rights take precedence over all others?  Knowledgeable, creative advocates like The Phia Group can identify the best route to maximize your recovery. C.P.R.C. c. 140 creates a solid framework governing (and limiting) subrogation and reimbursement recoveries in Texas. There are cracks, however, in the wall erected by Texas legislators. Plans which are able to identify these cracks and find creative ways to take advantage of the law’s non-obvious opportunities will be the ones who reap the benefits.

What Should I Do?

For information about The Phia Group and how they can help, contact:

Michael Branco
The Phia Group, LLC
Phone: 781-535-5618
Fax: 781-535-5656

SIIA State Legislative/Regulatory Update Report

On September 16, 2014
Exclusive Reporting for the Week of September 10, 2014

September 10, 2014 — This is your weekly update of state legislative/regulatory developments affecting companies involved in the self-insurance/alternative risk transfer marketplace. Should you have any questions on information provided in these reports and/or would like to alert SIIA to new state legislative/regulatory activity (health care, workers’ compensation and/or captive insurance matters) we may have missed, please contact Adam Brackemyre, Director of State Government Relations directly at 202/463-8161, or via e-mail at

Washington DC- Stop-Loss Legislation
An advocacy plan is taking shape in the District of Columbia to oppose harmful stop-loss legislation.

As part of this effort, SIIA will meet with DC Department of Insurance of Securities, Insurance and Banking (DISB) staff and City Council Members on the Business, Consumer and Regulatory Affairs Committee later this month to communicate industry concerns.

As previously reported, section seven of DC bill B20-0797 would effectively ban stop-loss in the small group market, require a $40,000 minimum individual attachment point and give the DISB commissioner the ability to increase individual and aggregate attachment points at his or her discretion.

NAIC- Stop Loss Paper is Available for Comment
The NAIC ERISA (B) Working Group’s stop-loss paper, available here, is still available for public comment. SIIA members are strongly encouraged to comment on the white paper. Several SIIA members requested a copy of the report last week.

SIIA convened its Government Relations Committee on Wednesday August, 27th and staff is drafting comments. All comments are due by September 16th, unless the NAIC extends the deadline.

If you need any assistance with submitting comments to the NAIC, please contact SIIA’s Director of State Government Relations, Adam Brackemyre, at or 202/595-0641.

Utah- Stop-Loss Law
Another SIIA member has been contacted by the Utah Department of Insurance (DOI), which is actively looking to make its state stop-loss law more attractive for stop-loss carriers.

The DOI is apparently researching why carriers are not selling in the small group market and may be making recommendations to the legislature to increase access to stop-loss insurance. SIIA expects to support such an initiative if it develops.

If your company has been contacted the Utah DOI staff, please let SIIA know so that we may better coordinate our efforts.

SIIA’s 34th Annual Conference
SIIA’s National Conference and Expo is scheduled for October 5-7, 2014 in Phoenix, AZ, which will feature a dedicated Legislative/Regulatory/Legal update session. Conference details, including registration forms, can be accessed on-line at, or by calling 800/851-7789.

Stop-Loss Market Expected to Grow to $14 Billion by 2018

On August 13, 2014
MyHealthGuide Source: Cyril Tuohy, 8/5/2014, InsuranceNet Article

A new report published by the ratings agency A.M. Best finds that rising demand for stop-loss insurance will come from small and midsize employers as self-insured insurance plans are not subject to certain requirements of the Affordable Care Act (ACA).

Analysts Tom Zitelli and Jason Hopper, co-authors of the report, estimated that the fee assessed on health insurers is expected to generate $8 billion in 2014 and grow to $14 billion by 2018. The fee has been passed along to employers in the form of rate increases.
According to the Self-Insurance Institute of America, the self-insurance industry’s main trade group, self-funding has advantages over the traditional insurance model.

Among the advantages are that employers can customize their plans to their employee population, employers maintain control over interest-bearing health plan reserves, self-funded plans follow federal Employee Retirement Income Security Act regulation instead of state health rules and employers avoid paying state health insurance premium taxes.

U.S. Department of Health and Human Services data show that in 2012, 59.9 percent of private-sector health plan enrollees were covered through self-insured plans, an increase of 20 percentage points from 40.9 percent in 1998.
Based on the research of 33 stop-loss insurers, A.M. Best said it expects stop-loss insurance to remain “a very competitive line of business.” Prices, therefore, will be attractive for smaller businesses considering self-insurance.

Sun Life, one of the largest writers of stop-loss coverage in the U.S., said a study of its claims data found that the increases were due to new medical technologies and advanced drug therapies.

Malignant forms of cancer were the top catastrophic medical condition from 2010 to 2013 with a value of paid stop-loss claims of $347.9 million, or 17.5 percent of all paid stop-loss payments that Sun Life made to policyholders over the four-year period, Sun Life said.

Chronic and end-stage renal diseases were next with a value of paid stop-loss claims reaching $164.3 million, or 8.2 percent of all paid stop-loss claims over the past four-year period.

2nd Quarter Newsletter 2014

On July 23, 2014

What a spring we have had here at The Phia Group. From travelling across the country speaking at various venues, hosting our own Phia Forum a few weeks ago, to our new service offerings; we have been extremely busy here at the home office. Now that the summer is here, you would expect that things would slow down but that’s not the case at all. As the temperature rises, so does our work load, as the number of issues facing the self insured industry continues to grow. Who said that health insurance is boring!?!?!?

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2nd Quarter 2014 Newsletter – Phia News

On July 8, 2014
Phia Gives Back: As is our tradition for the past several years, The Phia Group partners with a local charity where we invest our time, money and support to ensure a successful program. We not only make monetary donations, but also collect needed items and have a companywide day off so that our employees can volunteer their time and efforts to the cause. This year we have chosen to work with Jewish Family Service of Metrowest (JFS).

JFS provides vital social, health, and community services to alleviate suffering, enhance lives, and support people in need. The program that The Phia Group is involved with is the Reducing Achievement Gaps program (RAG). RAG is a comprehensive system of interventions to address the academic and social needs of poor children of immigrant families in Framingham, Massachusetts, located 30 miles from our office in Braintree.

RAG is based at the 550 student Woodrow Wilson Elementary School, located in Framingham’s poorest and highest-crime neighborhood. RAG gives Framingham’s most economically and educationally challenged school age children and their families the help and resources they need to succeed in school and in life. Please click on the link to this video to learn more:

 The Phia Group recently held a very successful recess drive for Woodrow Wilson Elementary School, and raised over 250 items for the students’ after school programs.

The Phia Group will be spending the day at Woodrow Wilson Elementary School for our annual volunteer day in July. We are going to help the school with various tasks, such as: planting and expanding the school vegetable garden, fixing the concrete school yard by repainting lines, a US map, and other recess games, enhancing the playground by purchasing and installing additional equipment, and interior painting of classrooms and the gym.

We would love to be able to provide the students of Woodrow Wilson Elementary School with everything they need, and would greatly appreciate any donation from you. If you would like to make a donation you may do so by visiting: here, or by mailing a check made payable to JFS of Metrowest to The Law Offices of Russo & Minchoff, 123 Boston St., 1st Floor, Boston, MA 02125.

New Faces at Phia:

Kayla Catarella, Accounting Administrator

Geraldine Legros, Claims Recovery Specialist Assistant

Andrew Silverio, Attorney

Adam Fralick, Customer Service Representative

The Legal Department has hired a new attorney, Andrew Silverio, to assist with its subrogation, reimbursement, and overpayment recovery operations.

Christopher Aguiar (J.D.) and Sean Donnelly (J.D.) are busily studying for the Massachusetts Bar Exam.

Toussaint Anderson has joined the “PGC” team as a Project Manager for the forthcoming PDM system.

Giuliano Stracco has progressed to the next level of Case Support.

Leiana Turner has progressed from a Case Investigator to a Claims Recovery Specialist III.

Jay Kemp has progressed from a Case Investigator to a Claims Recovery Specialist II.

Ashley Schramm has progressed from a Claims Recovery Specialist II to a Claims Recovery Specialist III.

Elizabeth Galewski has progressed from a Claims Recovery Specialist Assistant to a Case Investigator.

Regina Cattel has moved from Case Investigation to the Overpayment Department, now serving as an Overpayment Recovery Liaison

Are Overpayments Over?

On June 6, 2014
Ron E. Peck, Esq.

Illinois Federal Court Issues a Troubling Decision Declaring Overpayment Recoupment to be Identical to Claim Denials; Requiring ERISA Compliant Notification of Adverse Benefit Determination, and Rights of Appeal for the Provider.

Any and all entities involved in the payment of claims must become familiar with the case of Pa. Chiropractic Ass’n v. Blue Cross Blue Shield Ass’n, No. 09 C 519, 2014 WL 1276585 (N.D. Ill. Mar. 28, 2014), and its impact on the pursuit of overpayment refunds!

Below we provide a brief summary of the case and its impact on our valued clients. Upon reviewing the facts, you’ll likely agree with us that a detailed approach to overpayment refunds is needed.

Fortunately for our overpayment clients, The Phia Group’s dedicated team of attorneys, paralegals, and overpayment specialists not only assist their clients in pursuing reimbursement of overpaid amounts, they also provide correspondence for use in that pursuit, which adequately describe the reason for the overpayment, identifies applicable plan document provisions, and opens a dialogue with the provider enabling them to respond and request further review.

What’s the Case About?

Do providers have rights under ERISA to file suit?

Determining whether providers are “beneficiaries” under an ERISA plan, the court interpreted “benefit” to include a provider’s rights to receive payment. The court also found that if the plan sets up a payment scheme by which they pay the provider directly, other “anti-assignment” language will not eliminate the provider’s beneficiary status.

Do providers suffer an adverse benefit determination within the meaning of ERISA when the payer recoups overpayments?

The court stated that the payer’s “… practice of withholding or reducing payments to a provider when it determines that a previous payment was made incorrectly” … “falls within the applicable regulation’s definition of an adverse benefit determination.” This decision was made in response to payer practices of pulling back overpaid claims electronically (when possible) and/or offsetting overpaid amounts by denying future claims submitted by the same provider (regardless of the patient’s identity).

We question whether the characterization of “adverse benefit determination” is tethered more to the determination that an overpayment occurred, or, the later claims denied as an offset. It is also not entirely clear whether recovery of a payment made by pure technical error (computer glitch or math error), rather than because of a coverage determination, would constitute an adverse benefit determination if the funds could be recouped in some way which does not impact unrelated benefit payments.

Regardless, this decision means payers seeking to recoup overpayments must initiate a process more akin to denying a claim, complete with notification and an appeals procedure.

The Takeaway:
This case does not deal a death blow to any and all efforts to identify erroneously paid claims and recoup these overpaid amounts. It does however, suggest that for any recoupment effort which constitutes an actual “adverse benefit determination” (with the term “benefit” now clearly including payments – even overpayments – made by plans directly to providers), a meaningful notice and appeal process must be set up.

Recouping amounts which were paid due to pure error rather than eligibility or benefits related considerations may not fall within the strictest literal reading of the language of this case, but it seems likely that a later court may interpret the holding to have contemplated the inclusion of such action – applying the term “adverse benefit determination” and all that entails under ERISA, to all overpayments – regardless of cause!

Thus, the safest course, after establishing proper notice and review policies for overpayment determinations, would be to utilize collection methods which do not affect future benefit payments. With this in mind, and in light of this recent ruling and its potential to spread (impacting other venues and jurisdictions), The Phia Group will continue to guide its clients regarding proper procedures for adverse benefit determinations, handling overpayment recoupment efforts, and compliance with applicable law.

To learn more about this case and The Phia Group, please contact me at:

Ron E. Peck, Esq.
The Phia Group, LLC
163 Bay State Dr.
Braintree, MA 02184

"Dude, Where's My Subro?" - Integrating Subrogation - Sought by Employers & Loved by Administrators

On May 15, 2014

As plan sponsors and administrators examine their benefit plans in light of recent legal upheaval, now is our chance to implement important cost containment mechanisms. While only some changes are “mandatory,” while the “hood is open,” why not look around and make some other improvements? First and foremost, but often forgotten, is coordination of benefits, third party liability and subrogation. ”Subro” is one item that must be set forth in writing, and flow cohesively between the plan, stop-loss, network, and administrative service agreement. How recovery efforts are handled, who gets what (and when), and other subro-related issues can tie the elements of a strong plan together, or create gaping chasms between partners.

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State/Legislative Regulatory News

On May 9, 2014
Self-Insurance Institute of America, Inc.

Exclusive Reporting for the Week of May 7, 2014

May 7, 2014 — This is your weekly update of state legislative/regulatory developments affecting companies involved in the self-insurance/alternative risk transfer marketplace. Should you have any questions on information provided in these reports and/or would like to alert SIIA to new state legislative/regulatory activity (health care, workers’ compensation and/or captive insurance matters) we may have missed, please contact Adam Brackemyre, Director of State Government Relations directly at 202/463-8161, or via e-mail at

Connecticut- Assessment is Out of the Latest Budget Bill
The Connecticut House has passed a budget bill without including a previously proposed assessment on self-funded plan covered lives. While the final budget has not been approved, sources close to the Governor’s office and involved in budget negotiations told SIIA that a new self-funded assessment will not appear in the final bill (HB 5596).

SIIA and allied stakeholders had been vigorously opposing the assessment, which was designed to fund a new health care delivery system in that state, on the grounds that it was preempted by federal law and was bad public policy.

Several of the association’s individual members played critical roles in this successful lobbying effort. Brooks Goodison of Diversified Group contacted his clients and brokers, encouraging them to engage and provided them sample letters and updates. Denise Doyle of Stop Loss Insurance Brokers and Bob Madden of Lawley Benefits Group each provided clients with sample letters to send to their legislators. Charlie Barger of Pequot Health Care and Chris Brown of Berkley Accident and Health submitted letters opposing the assessment. Mike Kemp of IHC Risk Solutions alerted his clients and brokers, urging them to oppose the assessment. Rob Melillo at Guardian Life Insurance Company contacted brokers, who in turn, contacted clients urging them to oppose the assessment, too. A special thank you goes to Anita Schepker, a lobbyist retained by Diversified Group, who coordinated with SIIA’s government relations team throughout the effort.

While this was an important win in Connecticut, it has broader implications as additional states are contemplating assessments on self-insured employers and/or TPAs to fund public exchanges or other purposes.

New York – Stop Loss Legislation
The New York Senate’s stop-loss legislation is moving.

On Monday, S. 6917, which will protect the ability of organizations in New York with 51-100 employees/members to purchase stop-loss insurance when the small group market definition changes after January 1, 2016, was reported unanimously from the Senate Insurance Committee to the floor without discussion. SIIA submitted a memorandum of support.

On Wednesday, SIIA’s retained counsel met with high-ranking Assembly staff to discuss companion legislation and begin the push for a successful legislative push in that chamber. The association has also initiated an integrated advocacy strategy including the mobilization of numerous SIIA members who are engaging their smaller self-insured clients in New York to communicate the urgency of this legislation to their elected representatives.

Member companies already actively engaged in the grassroots lobbying effort include Berkley A&H, Lawley Benefits Group, Sun Life, HCC Life Insurance Company, East Coast Underwriters, Standard Insurance, Meritain Health and Gerber Life Insurance.

Please contact Adam Brackemyre right away if you would like to participate as part of this grassroots strike team. Thank you again to everyone who is already helping.

Washington DC- Council Approves Very Broad Insurance Assessment to Fund Exchange
Yesterday, the DC Council approved a new one percent tax on nearly all “health-related” insurance products, which probably includes stop-loss insurance.

Mayor Vincent Gray proposed the tax on Tuesday night as a way to ensure that the DC health insurance exchange had sufficient funding. Originally, the exchange was to assess qualified health and dental plans inside and outside the exchange. But with only 23,000 privately-insured individuals, the city council had to look elsewhere for funding the exchange’s $28 million budget.

Multiple entities are contemplating a legal challenge to the new law. As this situation continues to develop, SIIA will provide additional information.

SIIA’s 34th Annual Conference
SIIA’s National Conference and Expo is scheduled for October 5-7, 2014 in Phoenix, AZ, which will feature a dedicated Legislative/Regulatory/Legal update session. Conference details, including registration forms, can be accessed on-line at, or by calling 800/851-7789.

1st Quarter Newsletter 2014

On May 8, 2014
Well… “ObamaCare” is here, and so are we.  The sun continues to rise in the east, and set in the west; and business goes on.  Some of you have reaped the benefits of change, while others have suffered; but the reality is that for most of the industry, not much has changed.

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Taking It To The Limit - Accurately Identifying and Taking Advantage of Network Contractual Boundaries

On March 27, 2014

While it is true that some network contracts restrict a benefit plan’s ability to audit claims – or as is more often the case, simply prohibits the benefit plan from doing anything with the information so identified; some contracts apply unrealistic deadlines and still others contractually compel payment of claims otherwise excluded by the plan document… There are key provisions plan administrators can use to limit or eliminate the negative impact of such provisions.


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