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On January 14, 2020

By: Philip Qualo, J.D.

The Trump Administration has been very transparent in their efforts to undermine and dismantle the Affordable Care Act (ACA). There have been several milestones in these efforts, such as essentially gutting the ACA Individual Mandate by reducing the penalty to $0 for individuals who forego health plan coverage for the tax year. The Trump Administration has also passed on the torch to the federal courts, as the 5th Circuit Court of Appeals has recently ruled that the Individual Mandate is unconstitutional, and has kicked the case back to the lower courts to determine whether other parts of the ACA should be overturned as well.

However, there appears to be at least one aspect of the ACA that the Trump Administration appears to support – the revenue generated by PCORI fees. The Patient-Centered Outcomes Research Institute (PCORI) fee was established as a part of the ACA to fund medical research. Insurers and employers with self-insured plans are subject to the fee. The last PCORI fee payment was expected to occur on July 31, 2019 (or July 31, 2020 for non-calendar year plans). The ACA mandated payment of an annual PCORI fee was intended to be a temporary measure as it only applied to plan years ending after September 30, 2012, and before October 1, 2019, to provide initial funding for the Washington, D.C. based institute.

This past year, we have consistently advised our clients that PCORI fees would be a thing of the past – based on the law at that time. However, each time I wrote or spoke those words I had this gnawing feeling in my gut. Although the PCORI fee was intended to be a temporary assessment, it was difficult for me to imagine that we would let a revenue-generating assessment just slowly fade away into oblivion.

Well… it looks like I was right (I should have placed a wager on this!). On December 20, 2020, President Trump signed 2020 spending legislation (the 2020 “Further Consolidated Appropriations Act”), repealing three ACA related taxes: the 40% “Cadillac” Tax on high-cost employer-provided health coverage, a 2.3% excise tax on medical devices, and the Health Insurance Tax (HIT) on fully-insured plans. Although these cuts would appear to be in line with the Administration’s efforts to obliterate the ACA’s existence, for some reason, the Trump Administration make a last-minute decision to preserve and extend the PCORI fee for another 10 years through the Act. This means employers with self-funded plans must continue paying the administratively burdensome PCORI fee.

Although the future of the ACA is still a question mark at this time, based on this recent extension of a small portion of the ACA, I think it is fair to conclude that PCORI fees are here to stay. In about 9 years from now, whether the ACA is still here or not, I predict PCORI fees are either extended … again, or written into another legislation to make it a permanent excise tax on health plans.

Please note, that the next PCORI fee is due by July 31, 2020. The IRS has yet to announce the rates for this year, so say tuned!

Will Sex Discrimination be Re-Defined?

On June 6, 2019

By: Erin M. Hussey

Section 1557 of the Affordable Care Act (“ACA”) prohibits discrimination on the basis of race, color, national origin, sex, age, or disability with regards to certain covered entities’ health programs. A covered entity is one that receives federal funding as outlined in the ACA.

The US Department of Health and Human Services (“HHS”) has issued a proposed rule that would revise the regulations implementing and enforcing Section 1557. This proposed rule, among other things, would essentially allow HHS not to include “gender identity” and “termination of pregnancy” within the definition of “sex discrimination.”

By way of background, HHS’s 2016 regulation on Section 1557 redefined sex discrimination to include gender identity and termination of pregnancy. However, on December 31, 2016, a US District Court issued a nationwide injunction on certain parts of Section 1557, including gender identity and termination of pregnancy, and that injunction is still in effect. As such, this proposed rule would follow suit with that injunction. HHS details that this part of the proposed rule would “not create a new definition of discrimination ‘on the basis of sex’ . . . [but] would enforce Section 1557 by returning to the government's longstanding interpretation of ‘sex’ under the ordinary meaning of the word Congress used.”

In addition, plans that are not directly subject to Section 1557, must still ensure that the employer sponsoring that plan remains in compliance with Title VII of the Civil Rights Act. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin. The Equal Employment Opportunity Commission’s (“EEOC’s”) interpretation of its prohibition on sex discrimination includes discrimination based on gender identity and sexual orientation. However, there have been similar discussions of whether sex discrimination should be redefined under Title VII. HHS detailed this issue in their fact sheet on the proposed rule:

“On April 22, 2019, the U.S. Supreme Court granted petitions for writs of certiorari in three cases, which raise the question whether Title VII’s prohibition on discrimination on the basis of sex also bars discrimination on the basis of gender identity or sexual orientation.”

Therefore, while we wait to see if the proposed rules on Section 1557 are finalized, and for the outcome of the above-noted Supreme Court cases on Title VII, applicable health plans should remain cautious with regards to benefits and exclusions that may implicate sex discrimination issues. If you feel as if you are being discriminated against and would like to negotiate a fair rate, visit our claim negotiation page to learn more. 

To RBP, or Not to RBP: That is (one) of the Question(s)

On February 25, 2019

By: Ron E. Peck, Esq.

Why do employers offer health benefits to employees?  Some might point to the Patient Protection and Affordable Care Act (“PPACA” or “ObamaCare”) and say the law forces them to do so.  Yet, prior to the law’s passage in 2010, many (if not most) employers voluntarily offered health benefits to their employees.  There are a number of reasons for this, but suffice it to say, it was meant to attract and retain the best talent.

Indeed, once upon a time, health benefits were just that – “benefits.”  Now, it’s assumed health insurance is included in an employment package, and what was once a benefit is now an entitlement.

Why does this matter?  It matters for many reasons, but as it relates to reference-based pricing, or “RBP,” it matters insofar as RBP ultimately – more often than not – puts the patient (“a/k/a” the employee or their family) in the crosshairs when disputes arise between providers of healthcare services, and the benefit plans that utilize an RBP pricing methodology.

Perhaps – long ago – when health benefits were welcomed as “icing on the cake,” the fact that an individual may be limited in who or whom they could utilize for care, or risk being balance billed the difference between what the plan pays and what the provider charges, would not have been so onerous.   The employee might have thought, “Heck!  It’s better than nothing; and I suppose I could avoid the bill by selecting a provider that works with my plan.”

Today, however, not only do we expect to receive health benefits, but we are outraged when our out of pocket expenses increase.  This attitude, on the part of plan participants, is anathema to RBP.

At the same time, recall that RBP is a response to changing opinions as they relate to networks, and PPOs.  Looking back in time, one of the values inherent in PPOs was a discount off of provider billed charges.  It was assumed – “back in the day” – that the billed charges against which the discount applied were reasonable, and as such, getting discounts on top of reasonable charges had value.  The fact that the provider, by agreeing to accept the network rate as payment in full, had the secondary impact of protecting patients from balance billing, was just icing on the cake.

Today, however, we recognize that billed charges are so exorbitant, that network discounts do next to nothing to counter the abuse, and thereby are worthless.  As a result, the thing that once was a secondary benefit of network enrollment – balance billing protection for the patient – has become, more or less, the only valuable element of a network.  Yes; if asked why they are still using a network, most plans would not state it’s for the discount, but rather, it’s to avoid balance billing and protect patients.

Thus, we must ask ourselves – how much will we pay to avoid balance billing and protect patients?  If a provider charges $60,000, there is a discount of 30% ($18,000), $42,000 is thus expected as payment, and the reasonable fee is $5,000, is it worth $37,000 to protect the patient from balance billing?  If not, what will you pay – instead – to protect patients, if anything?

This is ultimately the question every plan contemplating RBP must ask itself.  How much more, beyond reasonable charges, am I willing to pay to protect my plan participants?

Piling onto this, politicians, lawmakers, regulators and courts seem more than happy to offset the rising cost of healthcare onto the benefit plans as well.  From FAQs released by the DOL, indicating that a failure to offer “adequate access” (“a/k/a” a network) will result in balance billed amounts counting against maximum out of pockets – and thus make the remainder of the billed charges owed and payable by the plan, to court decisions overturning previous rulings that determined hospitals can’t force patients to agree to pay whatever the hospital charges and sought to calculate fair prices when no fee was agreed upon, those in power seem dead set on allowing providers to charge whatever they want, and protect patients from any undue out of pocket expenses – by forcing plans to either contract with providers, or pay the cost.

I have personally advocated for working directly with providers, identifying value, and finding ways to create win-win scenarios without increasing how much the plan pays; instead offering providers things of value – other than cash – that incentivizes them to accept plan maximums as payment in full.  Yet, this effort is put into serious jeopardy whenever anyone “forces” a plan to enter into contracts or networks with providers.  Politicians and providers seem to treat (or want to treat) “networks” like a silver bullet.  The issue is, however, that networks are just a nice label for a “contract.”  If any rule or law “requires” a payer to enter into a contract with a payee, and failure to do so results in penalties for the payer, it puts an unfair advantage in the hands of the payee.  One key to successful negotiation – whether it be a provider network deal, buying real estate, or settling a law suit – if both sides don’t have something to gain, something to lose, and the freedom to leave the table, the “deal” won’t be fair.

As a result, the DOL FAQs, case law, and proposed laws that would “force” a payer (plan, carrier, etc.) to broaden their network, and force them to sign a deal with a provider, will result in one-sided deals, as providers know that the payer cannot “leave the table” without a deal.

These are all things one must consider when asking themselves whether to RBP or not to RBP.

An Appealing Option - Affordable Care Act Review

On October 16, 2017

By: Ron Peck, Esq.

Lately, I’ve caught myself talking (often) about fiduciary duty, appeals, and how they relate to each other.  In response to my commentary; that everyone needs to decide who is going to handle appeals and/or function as a fiduciary in that regard… some industry experts have asked how severe is the threat?  How likely is it that they will face a final appeal – make a bad decision – see that decision appear before a court – and be held liable for breaching their duty?  Indeed, in years past, second (final) appeals and external appeals were rare.  To this, I remind folks that as of March 23, 2010, Federal Law entitles all plan members to appeal health benefit plan decisions through an “internal appeal” process. If a benefit plan still denies payment or coverage, the law permits the member to have an independent third party decide to uphold or overturn the plan’s decision. This final process is often referred to as an “external review;”

Most benefit plans offer two appeals “internally,” before an “external” appeal can be filed.  The first internal appeal involves the plan administrator or its representative reviewing its initial claim denial.  The second internal appeal – often called the “final” internal appeal (since it is the last “bite at the apple” before a denial is submitted to an external reviewer for an external appeal), usually involves the plan administrator or its representative reviewing their response to the first internal appeal.  The repetitiveness and fact that the same entity is reviewing its own work over and over led lawmakers to include in the Affordable Care Act (“ACA”) provisions enabling participants to demand an external appeal.  Today, any denial that involves medical judgment where the patient or their provider disagree with the health insurance plan’s decision may be externally appealed, as well as any denial that involves a determination that a treatment is experimental or investigational, or cancellation of coverage based on an insurer’s claim that the insured gave false or incomplete information when they applied for coverage.  In 2016, the DOL released a denied claims report ( indicating that more than 2 million denied claims will be appealed in the next year.  Of that, more than half of those denials are overturned.

Insurance companies in all states must participate in an external review process that meets the consumer protection standards of the health care law, and the cost to the participant (requesting the appeal) can’t be more than $25 per external review;

Prior to these ACA reforms, success rates for appeals have been documented at more than 50% and these reforms provide an even greater likelihood of success when appealing denials; Government Accountability Office (US) Washington: GAO; 2011. Mar, [cited 2012 Mar 10]. Report to the Secretary of Health and Human Services and the Secretary of Labor: private health insurance: data on application and coverage denials. Also available from: URL:

In light of the low cost to the participant, likelihood of achieving payment (overturn of a denial), and absolute legal right to demand one, the rate of final level internal appeals and external appeals is skyrocketing.  Indeed, many providers of medical services are coaching their patients regarding how to file appeals, and supporting them through the process, as they are incentivized to see denials appealed as well.  As mentioned, the maximum cost to the participant is $25.  Most Independent Review Organizations charge a lot more than that per appeal, with some complex appeals costing thousands of dollars to review.  As a result, benefit plans will be the ones paying the lion’s share of the cost of external appeals; a cost they will incur regardless of whether the denial is upheld or overturned.  Take note: this cost (to utilize an IRO) is not paid once, but twice, by most plans.  Indeed, benefit plans will ordinarily hire an IRO to assist with the final, internal appeal – and if the claim remains denied – hire another IRO for the external appeal.  

Finally, if a claim is denied by the plan – both when first received, again upon first appeal, and again upon final appeal – and the matter is externally appealed… if the external reviewer determines that the claim is not only payable, but that the decision to deny was arbitrary – that plan may be penalized up to treble damages for fiduciary breach.  In other words, if the unpaid (but eventually payable) claims were $100,000.00, the plan may be forced to pay up to another $300,000.00 to the aggrieved parties – for a total payment of $400,000.00.  

So… In response to those who say that, in the past, final appeals, external appeals, and fiduciary liability were never major issues… they may be in for a rude awakening, as providers and patients continue to awaken themselves to the opportunities available to them, to fight denials – at no cost or risk to them.

Contact The Phia Group today about an affordable care act external review!

Repeal and Replace Faces a False Start - Affordable Care Act Review

On April 10, 2017

By: Brady Bizarro, Esq.

After the surprising collapse of the American Health Care Act (“AHCA”), House Speaker Paul Ryan (R-Wis.) remarked, “We’re going to be living with Obamacare for the foreseeable future.” Tom Price, the Secretary of Health and Human Services, proclaimed that Obamacare was “the law of the land.” In the immediate aftermath of the stunning political defeat, many political analysts concluded that the effort to repeal and replace Obamacare was finished. Only a few days later, however, there were talks of reviving the legislation over the next few weeks. The President himself took to social media to proclaim, “We are all going to make a deal on health care . . . that’s such an easy one.”

What changed? Republican leaders faced immense pressure from conservative activists, interest groups, the insurance lobby, donors, and constituents to follow through on one of their most significant campaign promises. In addition, the President has targeted individual congressmen, mostly from the House Freedom Caucus, and pressured them to get on board with the AHCA. Whatever the Republicans decide to do, they need to act fast. The legislative calendar is jam-packed with other top priorities, including passing a budget and tackling tax reform. Additionally, insurers are developing premiums and benefit packages for health plans to offer in 2018, and these will need to be reviewed by federal and state officials over the summer.

In the immediate future, despite the legislative failure, the Trump Administration still has plenty of ways it can cripple the ACA. The President himself has said the law would “explode” on its own, but that process could certainly be accelerated. For example, the Administration could block funding for ACA subsidies, refuse to enforce the individual and employer mandates, and redefine Essential Health Benefits (“EHBs”).

That last part, redefining EHBs, could have a significant impact on employer-sponsored health insurance. In fact, a new bill is in the works, and one of its provisions (included by the Freedom Caucus) is to repeal EHBs entirely. Essential Health Benefits are requirements that insurers have to cover services like maternity care, mental health care, and hospitalization. According to Republican lawmakers, removing these requirements would significantly lower the cost of certain health plans because they would not be forced to cover a defined list of services.

We will continue to follow new developments closely, especially those that impact employer-sponsored health care.

Contact The Phia Group today about an affordable care act external review!