Phia Group Case Study: Handbook, Schmandbook

A client of The Phia Group faced a situation in which the group’s Plan Document referenced an extension of coverage for up to 24 months for participants unable to actively work due to disability. To contrast, the employer’s Employee Handbook referenced an extension of coverage for up to 36 months, or longer if deemed appropriate by the employer. The group’s stop-loss policy provided coverage only for the length of time dictated by the plan document (24 months).

The health plan’s broker referred the Plan Document and stop-loss policy to The Phia Group’s consulting team to perform a Gap-Free Analysis. As part of this analysis, it was discovered that the Plan Document’s leave provisions did not align with those in the stop-loss policy. The Phia Group’s team also included a note to ensure that if the Plan Document was changed, the Employee Handbook may need to be changed to align as well. Upon receiving the Gap-Free Analysis, the group’s broker asked The Phia Group to review the Employee Handbook and make whatever changes were necessary for the documents to align; upon review, the additional discrepancy was discovered and remedied.

Three months later, after the Plan Document and Employee Handbook were amended to alleviate the gaps in coverage, a member requested 18 months of leave from the employer. The employer was free to grant the leave based on other terms in the Employee Handbook, but the employee was informed that after twelve months, coverage under the Plan would terminate. As luck would have it, during the fifteenth month of the employee’s leave, she incurred significant medical claims that, if paid by the Plan pursuant to its former language, would have been denied by stop-loss. By addressing gaps in coverage, the Plan successfully avoided a large stop-loss denial.

Service Highlight of the Quarter: Phia Unwrapped

In the past, wrap networks provided a great amount of value to health plans. They effectively enlarged the plan’s primary network, somewhat like being able to utilize T-Mobile’s cell phone towers when out of AT&T range. The old theory, however, no longer holds true. Just as primary networks add less and less value as the magnitude of medical bills increase dramatically and arbitrarily, so to have wrap networks become more cumbersome than they are valuable.

Phia Unwrapped is designed as a replacement for non-contracted claims – whether they would normally be subject to a wrap network or treated as out-of-network. Phia Unwrapped is a way of keeping the plan’s primary network as always, but ensuring that all other claims are repriced accurately and responsibly, that patients have an advocate to help them through any potential balance-billing, and that the plan has experienced legal and negotiation support on the back end to secure the best possible outcomes.

In the Plan year 2014-2015, an 1,100 life Employer Group had 32% combined “savings” from their out-of-area wrap PPO program and out-of-network claim “solutions.”  Dissatisfied with these so called solutions and hearing about the strategic merits of reference based pricing (RBP) the employer switched to Phia Unwrapped. This switch allowed the group to pay a reasonable amount on claims while also providing support for members to make sure they were not caught in the crossfire with a provider attempting to collect abusive charges.

The results? In the Plan year 2015-2016, the employer had 74% savings paying 140% of Medicare, totaling an additional $2.8 Million in savings compared to traditional solutions.  Though the employer was initially concerned about “noise” from the members (who to this point only had out of pocket differentials for going out of network), Phia's industry leading balance billing support managed by Attorneys ensured that there was minimal member disruption (2%). 

What does “disruption” look like?

The group had an out-of-network emergency trauma claim, which was billed at $241,000.  Upon receipt of the out-of-network claim, the pre-setup EDI feed sent the claim to Payer Compass for re-pricing, pursuant to the Phia Unwrapped program. The third-party administrator subsequently received pricing back from Payer Compass; the Plan’s language – which specified payment at 140% of Medicare – allowed a little over $81,000. In accordance with the Phia Unwrapped service, the claims administrator paid the claim at the allowed amount.

Three months later the hospital balance billed the patient, at which point the patient spoke to Payer Compass and The Phia Group, clearly concerned about the balance billing. After a few rounds of back-and-forth with the hospital, the bill was escalated to The Phia Group’s Provider Relations department, which had been authorized to negotiate on the Plan's behalf. After a series of lengthy negotiations, which included email and phone correspondence with the hospital CFO, The Phia Group and the hospital reached an agreement to settle the claims for a total payment of 175% of Medicare, yielding significant savings from billed charges. These savings proved to be much higher than the 20% discount that the Plan would have realized if it still used the wrap network.

In the next billing cycle, The Phia Group reimbursed the difference between what it had originally billed as its fee and what it now billed for the final savings:

Whatever your out-of-network volume, Phia Unwrapped is the solution you have been waiting for.

Fiduciary Burden of the Quarter: Strictly Abiding by the Terms of the Plan Document

ERISA is very clear that the Plan Administrator is required to administer benefits strictly in accordance with the terms of the applicable plan document. Plan Administrators, though, are often faced with difficult situations – situations where paying a claim that might otherwise be excluded under the plan document would avoid considerable headache, appease a member of the C-suite, or more accurately reflect what the drafter of the plan document intended, even if the language does not provide for that outcome.

We at The Phia Group have been presented with many situations in which the plan document says one thing, but the Plan Administrator wants to do another. Our advice is always the same – be careful and mind your fiduciary duties – but at the end of the day, the Plan Administrator is the decision-maker and should do what it feels is appropriate, being mindful that stop-loss will likely not be quite so sympathetic to the Plan Administrator’s deviation from the terms of the plan document.

One such example came in the form of a particular plan working to administer an exclusion for illegal acts. A twelve-year-old plan participant committed an illegal act, according to the plan document, when the child inadvertently drove an ATV on a public road in a jurisdiction that considers it a crime to ride an ATV on that road. In the next county over, this would not have been a crime – and the child reportedly was not aware that he had entered a jurisdiction where his actions were a crime. There was an ATV crash, and claims were incurred. Upon being presented with claims related to the accident, the plan’s TPA read the language of the plan document, analyzed the facts of the case, and came to the conclusion that the claims should be denied. Since these were not claims that were doubtful or disputed, the TPA rendered the determination without the need for any discretion.

Upon discovering the denial, the group was not happy. According to the group, it never intended for its “illegal acts” exclusion to apply to a twelve-year-old on an ATV; this, according to the Plan Administrator, was a simple mistake on the part of the child, who was not aware what he was doing was illegal. The Plan Administrator was eager to overturn the denial to effect what it considered its real intent – which was to punish acts committed by adults, with knowledge of the illegality of their actions.

Is it appropriate to read such an exception into the terms of the plan document? If the plan document says “illegal acts” but the Plan Administrator wants to apply the exclusion to some illegal acts but not others depending on the circumstances, it creates a potential problem in that the Plan Administrator has failed to strictly abide by the terms of the plan document. This means the plan document has been administered inconsistently.

Practically speaking, do people usually complain about claims being paid? Of course not. But legally speaking, is the Plan Administrator permitted to create exceptions to unambiguous language on a case-by-case basis? Not according to ERISA. Violating fiduciary duties is a problem – especially in light of the Department of Labor getting stricter about audits whenever there is even a hint of impropriety. It is not likely that anyone would report this fiduciary violation – but that does not mean it is a good idea to violate the fiduciary duty to begin with. The Phia Group’s attorneys will attest to the notion that a low likelihood of punishment for a fiduciary violation is neither an excuse nor a good reason to commit the violation.

As mentioned above, the stop-loss carrier would likely not be pleased about the Plan Administrator’s determination either. If the Plan Administrator wants the language changed, the Plan Sponsor should effect an amendment – but as far as stop-loss is concerned, the plan document has been underwritten as-is and a claim, such as this one, should be denied by the Plan. As we have all seen first-hand, when a stop-loss carrier receives a claim for reimbursement that should not have been paid by the
Plan in the first place…well…let’s just say it’s not an ideal situation.
 

New Services Announcement: The Phia Group: Catering to More of Your Needs

Leave of Absence Review – With The Phia Group’s Leave of Absence Review, employee handbooks, health benefit plan documents, and stop-loss policies align, all while remaining compliant with applicable law. Click here to learn more!

Flagship Plan Document – With The Phia Group’s Flagship Plan Document, clients can enjoy speedy & efficient production of best-in-class plan documents, with minimal time or monetary investment. Click here to learn more!

If you would like to speak with one of our specialists regarding the new services we offer, please feel free to contact us at [email protected] so we can schedule a call.

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From the Blogosphere

• ACA to AHCA… A Look Back on the Past 7 Years. Seven years in the making.

• Health Insurance is NOT Health Care. Sit back, relax and enjoy Ron Peck’s metaphors.

• U.S. Airways v. McCutchen – Where Are They Now? It seems like it was just yesterday.

• The Guilty Shall Remain Nameless - Yet I Shall Shame Them… Again. Quote: “Yes… Is there someone else here I can talk to?”

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Webinars

The Double-Edged Sword of Discretion: How Even Great Plan Document Language Can Cause Gaps in Coverage

On April 27, 2017, The Phia Group will present “The Double-Edged Sword of Discretion: How Even Great Plan Document Language Can Cause Gaps in Coverage.”

Click HERE to Register!

On March 23, 2017, The Phia Group presented “Medical Bill Blues: Pre-Payment Contracting and Negotiation, Pricing Alternatives, and Post-Payment Recovery of Overpayments,” where we analyzed the various ups and downs we associate with "provider relations.”

On February 15, 2017, The Phia Group presented “Top Miscues Employers Make When It Comes To Their Health Plans ... And What We All Can Do To Become Health Plan Heroes.”

On January 19, 2017, The Phia Group presented “Back to The Self-Funding Future – Which Echoes of 2016 Will Continue to Impact Self-Funding in 2017,” where our legal team talks about how the past decade has ushered in both outrage and opportunity for self-funded plans.

On January 4, 2017, The Phia Group presented a brief webinar to describe some changes recently made to our reporting portal.

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Podcasts

On April 4, 2017, The Phia Group presented “The AHCA Failed: Where To Next,” where our legal team discusses the recent, stunning failure of the GOP’s American Health Care Act.

On March 13, 2017, The Phia Group presented “Attack of the Killer Savings,” where we identify facilities that provide the best outcomes for the least cost.

On February 28, 2017, The Phia Group presented “The Journey Continues,” where Adam Russo & Ron Peck discuss what makes our health benefit plan unique.

On February 13, 2017, The Phia Group presented “The Next Episode,” where we talked about what makes our health plan a source of savings.

On January 30, 2017, The Phia Group presented our very first podcast, “The Maiden Voyage.”

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The Phia Group’s 2017 Charity

The Phia Group's 2017 charity is the Boys & Girls Club of Brockton. 

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 Brockton (BGCB) 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 youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.

Monthly Donations From Phia

For more information or to get involved, visit www.bgcbrockton.org.

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The Stacks

Self-Funded Health Plans May Have a New Ally in the Fight Against Specialty Drug Prices
By: Brady Bizarro, Esq.

Throughout the bitter and seemingly endless presidential election cycle, Donald Trump and Hillary Clinton vehemently disagreed on almost every issue, especially those involving health policy. Yet, there was at least one health policy issue on which both candidates agreed: prescription drugs are too expensive. For self-funded health plans, this is old news. The industry continues to face increasing costs overall, and prescription drugs make up a significant portion of those costs. Specialty drugs are particularly culpable. Specialty drugs accounted for 32 percent of all drug expenditures in 2014 despite making up less than one percent of all written prescriptions, according to research conducted by Express Scripts.

Click here to read the rest of this article.

Appealing to Reason
By: Jon A. Jablon, Esq.

The language is exceedingly common within benefit plans. We’ve all seen it; in order to appeal a denial, a medical provider must be specifically appointed by the patient as the patient’s “authorized representative.” Only members may appeal their own claims, unless they appoint someone to do so. Some third-party administrators and plan administrators even have a form that a member must fill out. These are long-held maxims by many – but are they truly compliant?

Click here to read the rest of this article.

Held Captive by Appeals
By: Tim Callender, Esq.

Prior to the passage of the Affordable Care Act, self-funding was already healthy and growing. Since the passage of the Affordable Care Act (and predominantly due to the ironic increase in healthcare insurance costs through the fully-insured, carrier model) we have seen self-funding grow even more. Although this growth has been significant, there are some employer groups – primarily small and mid-sized groups – that have struggled to find a sustainable path into self-funding nonetheless.

Click here to read the rest of this article.

As Employer-Sponsored Plans Multiply, Self-Funding Remains an Attractive Option
By: Brady Bizarro

As the new year begins, we can reflect on annual reports and surveys recently released by federal agencies and non-profit organizations which measure public and private healthcare spending and reveal trends in national health policy. One of the most prominent reports is the National Health Expenditure Accounts report, which was released in December by the Centers for Medicare and Medicaid Services. Some of CMS's findings forecast tough times ahead for employer-sponsored health insurance. Now, more than ever, employers will need to develop innovative approaches to continue offering affordable coverage to their employees.

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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Phia’s Speaking Events

Adam Russo’s 2017 Speaking Engagements:
• 2/22/17 – TABA Spring Conference – Austin, TX
“The Good, The Bad, and the Naughty – Ethics: Simple Mistakes vs. Breach”
• 3/16/17 - IMA National Independent Agency Consortium – Bonita Springs, FL
“Not Your Grandmother’s Self-Funding: Best Practices for a Changing Industry”
• 3/21/17 – Advantage Benefits RBP Seminar – Grand Rapids, MI
“The Best Gets Better - Getting the Most Out of Your Self-Funded Plan”

Adam Russo’s Upcoming Speaking Engagements in 2017:
• 4/24/17 - Berkley Captive Symposium – Grand Cayman Islands
“The Best Gets Better - Getting the Most Out of Your Self-Funded Plan”
• 5/4/17 – Benefest – Westborough, MA
"Multiple Personalities - The Biggest Issues Impacting Plans & Employers, and Instances Where They are Their Own Worst Enemy"

Ron Peck’s 2017 Speaking Engagements:
• 4/3/2017 – Eastern Claims Conference (ECC) – Boston, MA
“The Good, The Bad, and The Ugly: Understanding Reference Based Pricing in the Special Risk Market”

Tim Callender’s 2017 Speaking Engagements:
• 2/2/17 – Alaska Association of Health Underwriters – Anchorage, AK
“Innovation and Cost-Containment In the Self-Funded Space”
• 2/27/17 – LBG Advisors: Benefits Symposium – Anaheim, CA
“Innovation and Cost-Containment In the Self-Funded Space”

Tim Callender’s Upcoming Speaking Engagements in 2017
• 5/22/17 - Group Underwriters Association of America Annual Conference - Denver, CO
“The Future of Health Plans”
• 7/17/17 - Health Care Administrator’s Association TPA Summit - St. Louis, MO
“Conference Emcee”

Jen McCormick’s 2017 Speaking Engagements:
• 3/29/17 – SIIA Executive Forum – Tucson, AZ
“Department of Labor Audits”

Brady Bizarro’s 2017 Speaking Engagements:
• 1/22/17 – Texas Association of Benefit Administrators (TABA) – Austin, TX
“Healthcare Policy under the Trump Administration”

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Get to Know Our Employee of the Quarter:
Erik Graber

Congratulations to Erik Graber, the Phia Group’s Q1 2017 Employee of the Quarter!

“Erik embodies everything Phia is about from our mission statement to our vision to our culture.  Throughout Q1, Erik has been tenacious in his pursuit of teaching and training new team members; giving them the tools essential to succeed in their roles.  The life of an IT Director is not a glamorous one and Erik works assiduously, oftentimes nights and weekends – sacrificing precious family time – to meeting and exceeding his goals and deadlines to ensure our company runs seamlessly.  If there is an issue you can rest assured Erik will promptly handle the matter – possibly with a bit of sass and sarcasm!  Erik is truly an asset to The Phia Group, and we’re fortunate to have him!”


 

Congratulations Erik and thank you for your many current and future contributions.

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Phia News

Promotions at Phia:
• Keith McMahon was promoted from CI to CRS III
• Lauren Vermette was promoted from legal assistant role to CI
• Cara Carll was promoted to Team Leader of the MedPay & Work Comp. Tier
• Kerri Sherman was promoted to Team Leader of BI Tier & Case Investigation
• James Newell was promoted to Team Leader of Claim & Case Support
• Angela Grande was promoted to CRS III
• Katie Delaney was promoted to Team Leader of the Quality Analysts.
• Jude McNeil was promoted to Team Leader of the Call Center in Customer Service
• Lisamarie DeCristoforo was promoted to Team Leader of Case Evaluation in Customer Service

New Hires This Quarter:
The Phia Group has added 5 new employees to its staff this quarter. They include:
• Matthew Painten was hired into our Marketing department
• Jeff Hanna was hired into our Accounting department
• Randal Moody was hired into our IT department
• Krista Maschinot was hired into our Phia Group Consulting department
• Victoria Pace was hired into our Phia Group Consulting department

Open Positions at Phia
• Case investigator
• Attorney I
• ETL Specialist
• Data Architect
• IT Technologist
• Product Analyst

Click here for more information or to apply today!

Additions to the Phamily:
• Tara Trojano gave birth to a baby girl, Emily Rose, on 02/09/17
• Liz Welcome gave birth to a baby boy, Quinton Jay Robert Pereira, on 02/01/17

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