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I Hate Surprises!

On December 22, 2020

By: Ron E. Peck

As a member of the health benefits community, I – like many of you – have heard about the proposed “No Surprises Act.”  Many representatives of our health insurance and benefits community have reached out to me asking whether this “new law” will make balance billing “illegal,” and thus enable plans to leave their networks behind and pay claims solely based upon a Reference Based Pricing (“RBP”) methodology.

Before we dive into what the No Surprises Act is (and isn’t), let’s first – as of the time this missive is being drafted – recognize that it is presently “a bipartisan, bicameral deal in principle.”1   The “Committee leaders” are on record as having said that they “… look forward to continuing to work together to finalize and attach this important new patient protection to the end-of-year funding package,” and that they are “… hopeful this legislation will be signed into law…”  Despite Congress’ vote to pass the bill, which includes the No Surprises Act, unless and until it is signed into law by the President, it isn’t a law of the land (yet).

A wise person plans for anything and everything, however, so let’s proceed under the assumption that this “deal” will in fact become law.  The question (then) is whether, as mentioned above, the No Surprises Act outlaws balance billing.  The answer is no; not even close.

The name of the proposed law is literally the no “surprises” act, and the above mentioned Committee leaders specifically state that, “Patients should not be penalized with these outrageous bills simply because they were rushed to an out-of-network hospital or unknowingly treated by an out-of-network provider at an in-network facility.”  

This proposal relates solely to “surprise” balance bills.  

One trend, seen from both government and media, is to confuse the term “balance billing” with the more specific term, “surprise” balance billing.  In a nutshell, every brown squirrel is a squirrel, but not every squirrel is a brown squirrel.  Similarly, every surprise balance bill is a balance bill, but not every balance bill is a surprise balance bill.  
 
A surprise balance bill is an amount submitted to a patient for payment that represents the difference between what a health plan paid, and the amount a provider charged for out of network (“OON”) services, provided in response to an emergency, where the patient didn’t choose the provider (nor did they have the ability to choose).  Alternatively, a surprise balance bill is an amount submitted to a patient for payment that represents the difference between what a health plan paid, and the amount an OON provider charged when the patient treated at an “in network” (“IN”) facility, but a specific healthcare professional at the facility – that provided services to the patient – is independently OON.
 
When a plan pays a usual and customary or “RBP” rate (often a percent of Medicare, or some other objective pricing metric) to a non-contracted provider, and the provider subsequently seeks payment from the patient of an amount that is in excess of the maximum allowable amount paid by the plan, this is balance billing.  If the scenario doesn’t fit into the one of the two definitions explained above, then that balance bill is not a surprise balance bill, and – for the time being – the “No Surprises Act” is moot.  

Further complicating the situation, most RBP plans do not utilize any network at all.  This in turn nullifies one, if not both, of the scenarios that give rise to a “surprise” balance bill.  

Specifically, when there is no network, a patient cannot find themselves in a situation where they visit an IN facility, only to have an OON provider provide services.  This is because there are no IN facilities at all.

Further, depending upon how lawmakers interpret the interplay between the proposed rules and emergency services, it may be that an RBP plan will not benefit from protections afforded to patients in response to “emergency” situations either.  Recall that the rule, and definition of surprise balance billing, envisions a scenario where a patient is whisked away to an OON provider in an emergency situation.  The theory is that the patient “would have chosen” an IN provider had they had the chance.  Yet, with an RBP plan that has no network at all, the patient could not have chosen an IN facility – emergency or not.  In other words, with an RBP plan that has no network at all, the fact that the need was urgent (an emergency) has no impact on whether the patient is treated at an OON facility.

Benefit plans that do utilize networks should pay close attention because this proposal will impact them.  Additionally, despite the above, even RBP plans and plans that don’t use a network should also pay attention – not because the proposal will impact them (it won’t), but because the way with which the rule addresses surprise balance bills may be a glimpse into the future, and a hint as to how lawmakers would seek to deal with all balance bills – not just surprise balance bills.

With this in mind, one item that should cause payers to tremble is the fact that, in direct opposition to the philosophy underpinning RBP, the “No Surprise Act” does not reference any objective payment standard.  In other words, there is no universally agreed upon standard the parties can use in determining a fair payment.

The initial hope is that payers and providers will try to resolve payment disputes on their own.  This initial “step” in the process, heralded as a novel step forward, does nothing more than document what most payers are already trying to do and have been trying to do for some time.  When a patient is balance billed, a benefit plan rarely ignores their plight, and already seeks to resolve the matter with the provider – despite the plan not “technically” having an obligation to pay anything more.

Herein lies my concern – when the provider has a right to pursue payment from a patient (balance bill), and a payer has a right to cap what they will pay, both parties have something the other wants.  The provider wants to be paid promptly, by the plan (whose pockets are far deeper than the patient’s).  The provider recognizes that they aren’t guaranteed payment from the patient, and thus they are incentivized to work with the plan – applying the old adage that “a bird in the hand is worth two in the bush.”  The plan, meanwhile, wants to protect their plan member from balance billing.  Thus, even though they have paid all they are required to pay, the plan is compelled to pay more to protect the plan member.  As a result, as mentioned above, both parties have something the other wants, and have a reason to negotiate in good faith.

In a new world, where the plan will be required to pay more – either a smaller amount proposed by the plan, a larger amount proposed by the provider, or some negotiated amount in between – the “threat” of the plan walking away without paying anything additional (a right the plan presently has) is stripped away, giving the provider more negotiation power and the plan less power than is presently the case.  For this reason, the proposed rule hurts rather than helps negotiation efforts.

How could this be allowed to happen?  As one reviews the proposed rule, one realizes that certain assumptions are in play.  First, that benefit plans universally underpay claims when they are OON.  Second, that benefit plans will never negotiate or pay anything additional when a participant is balance billed.  As such, a law is required that will scrutinize what the plan paid and will force the plan to pay more.

For plans that already pay an objectively fair amount for OON claims, and already engage in good faith negotiations to protect patients from balance bills, these assumptions should be offensive, and the resultant rule should horrify.

Further worrisome is the so-called arbitration that ensues if a negotiation fails.  The style of arbitration is “baseball arbitration;” a process where the arbiter is stripped of their power to steer the parties toward a middle ground and is instead forced to pick one of two amounts – one proposed by each party.  As a result, benefit plans are cautioned against offering a too-small amount (including nothing additional), even if it seems fair to them, for fear of offending the arbiter and losing before they even begin.  Of course, the counterpoint to that is that one does not negotiate against themselves.  Many will not want to offer a too high amount, for fear that they will call their original payment (and logic behind the payment) into question, as well as embolden providers to increase their rates in response.

This, then, leads to another concern.  If payers will be forced to pay “something” additional, why should providers avoid increasing their rates?  

All involved in this proposal explicitly agree that this process is more favorable to providers.  It’s why they supposedly added so-called “guardrails” to help ensure that the arbitration process is not abused.  

First, payers and providers must engage in 30 days of negotiations, prior to requesting arbitration within 48 hours of the final day’s passage.  This supposed guardrail only benefits providers.  Presently, “pre-rule,” plans that have paid the maximum amount according to their controlling document seek only to negotiate to protect their plan member from balance billing.  They, until now, gained nothing from paying more.  Providers, on the other hand, are seeking financial gain.  Prior to this rule, the threat that the plan could walk away, and the provider could be forced to pursue the patient – and likely get nothing additional – was an incentive to negotiate in good faith.  Now, with the arbitration “light” shining at the end of the 30 day “tunnel,” providers will demand 100% of billed charges, refuse to negotiate, and simply await arbitration – knowing that they will either be rewarded with between a little more and a lot more payment from the plan.  At best, they can assert a right to 100% of billed charges and win that amount in arbitration.  At worst, they will get an amount the plan proposes (which is still more than the plan’s original payment – and thus more than the provider could potentially expect to get – should negotiations fail – pre-rule change).  In other words, in a world where payers will be forced to pay more, and providers are not punished for charging excessive amounts, there is no downside to charging more, ignoring negotiations, and waiting for arbitration.

A rule that some say will prevent the overuse of the arbitration process is that the losing party will be responsible for paying the administrative costs of arbitration.   Of course, those in our industry recognize that – for the reasons explained above – even if the provider loses (and is forced to pay the costs of arbitration) the additional payment from the plan of the lesser amount presented by the plan plus the already marked up rates initially paid by the plan, will outweigh the occasional loss and corresponding administrative costs.  

Arbitrators, meanwhile, have the flexibility to consider a range of factors, but unfortunately – none of those factors are objective.  They will be forced to limit their examination to only factors raised by the parties, and – significantly – not what the provider usually accepts from other payers.  Additionally, the arbitrator is not supposed to review the billed charges (the chargemaster rate), but – assuming the provider is seeking payment of their charges in full via arbitration – that limitation is irrelevant.

Optional factors that an arbitrator could consider include, among others, the level of training or experience of the provider or facility, quality and outcomes measurements of the provider or facility, market share held by the out-of-network health care provider or facility, or by the plan in the geographic region, patient acuity and complexity of services provided, and teaching status, case mix, and scope of services of the facility.  We question whether the payer will have an opportunity to challenge these metrics, or – as it appears to be presented – whether this is simply an open invitation for the provider to justify their demands.

Additional factors that the arbitrator may consider, and which are both beneficial to payers as well as uniquely worrisome, are any good faith efforts by the provider to join the plan’s network, past contracted rates, and the median in-network rate paid by the plan.  

On the positive side, this will hopefully prevent the billed charges from being deemed the “starting point” or misrepresented as what is “usually paid” by benefit plans.  Generally speaking, States that have implemented regulations limiting surprise balance bills that take such median rates into consideration generally see smaller amounts being paid than in States that do not take median rates into consideration.

On the flip side, knowing this information may be used against them in the future, will providers seek to contract for more with networks, to avoid creating a lower floor should they be forced to fight for OON payments at a later date?  As for plans that do not even have a network, such as an RBP plan, how will these metrics apply to them?

This focus on networks, as well as in and out of network status, is a red herring.  No payer should be forced to pay an abusive amount because they did or didn’t lock themselves into a contract at some earlier date, or with someone else.  Each service provided by a provider should entitle that provider to fair compensation.  If, four years prior, I agreed to pay $100,000 for an automobile that had a sticker price of $30,000, that mistake should not doom me to a lifetime of overpayments.  If I paid $100,000 for a car worth $30,000, my wife shouldn’t be forced to do the same when she is purchasing a car.  We should be allowed to pay a fair price for the service we are purchasing – in a vacuum and based solely on the value of that service, and that service alone.

“As we have stated many times before, the AMA strongly supports protecting patients from the financial impact of unanticipated medical bills that arise when patients reasonably believe that the care they received would be covered by their health insurer, but it was not because their insurer did not have an adequate network of contracted physicians to meet their needs,” AMA Executive Vice President and CEO James L. Madara, MD, wrote in a letter to congressional leaders.2

This statement from the American Medical Association’s leadership exposes two worrisome philosophies.  First, that it is reasonable and appropriate to expect benefit plans to agree, via contract, to pay a provider whatever that provider wants – regardless of how excessive or abusive those prices may be.  Second, that benefit plans should be forced to create and expand networks until they have no bargaining power and thus cannot exercise any cost controls whatsoever.  I would ask Mr. Madara what he believes constitutes an “adequate” network.  25% of providers?  50%?  100% of providers?  As that network grows, in-network status loses its exclusivity, and steerage of plan participants is spread, thinning the number of patients visiting each provider and lessening the value of in-network status for the providers.  This in turn justifies the providers demanding more payment, and lesser discounts.  

This philosophy, shared by the AMA and providers alike, exposes a baseline assumption that has become prevalent in our nation, and serves as a foundation for a flawed system.  No other type of insurance is “forced” to contract with providers.  Whether it be homeowner’s insurance, auto insurance, or any other form of insurance – insurance pays the fair value of the loss, and the objectively reasonable cost of repair or replacement.  Yet, here we see the American Medical Association’s leadership stating that benefit plans should be punished for not contracting with providers, before a service is even provided, and failing to agree to pay whatever the provider chooses to charge when the time comes.  Imagine if your auto insurance carrier was forced to contract with every auto manufacturer, agreeing to pay whatever the car maker charges at the time an insured needs a new car, without knowing what those prices will look like at the time the contract is signed.  Imagine how automobile manufacturers could and would abuse that one-sided deal, and what that would subsequently do to your premiums.  

The bottom line?  With this new rule, providers are not punished for failing to contract with payers.  Payers are punished for not contracting with providers.  This puts all of the negotiation power in the hands of the provider.  They know they can leave the “networking table” without a deal and collect their lump of flesh later.  The payer, however, now is desperate to get a contract signed – and will sign a deal, no matter how abusive – to avoid the punishments they will suffer when they dare to allow a provider to be OON.

Before this review can be concluded, it is important to recognize that this assessment has been mostly negative.  Hopefully you will forgive the author his gloomy tone.  Many people see that surprise balance billing is being identified as an issue – and that, in and of itself, is a good thing.  Unfortunately, the approach presented by the No Surprises Act minimizes the importance of examining objective metrics, is over reliant upon networks, and ignores amounts providers accept as “payment in full” from other payers – including Medicare and Medicaid, as well as actual cost to charge ratios.  Rather than drill down to the question of what constitutes “fair” compensation, the process will instead ask what constitutes the “most common” compensation.   Looking at the current state of the healthcare industry, one would be justified in expressing concern over future dependence upon past “averages.”  

Hopefully arbitration won’t take place in a vacuum, despite the analysis above.  Furthermore, there are other reasons for optimism.  Much of the proposal depends upon future rulemaking.  There is an opportunity to further define how the rule will be applied through the regulatory process.  Stakeholders are encouraged to analyze the rule, contemplate how it will impact them, and propose solutions to shift the end result to a more equitable conclusion.  This is not the end, but rather a foot in the door.  

Consider also the inclusion of air ambulance claims.  For too long this subset of healthcare has been allowed to operate without limitation and gotten away with unfettered billing practices.  By being included in this proposal, we are turning the corner and taking one step in the right direction.

Lastly, while the rule isn’t perfect, it does also require providers to exercise a new level of transparency – notifying patients when they may be treated by an out of network provider, and requiring the use of a waiver that is (hopefully) more robust than the traditional intake forms signed by patients today.

Thus, in closing, while the No Surprises Act is far from perfect, there exists an opportunity to adjust it through the regulatory process and it shines a light on some issues that have been hidden for too long.

1. https://www.help.senate.gov/chair/newsroom/press/congressional-committee-leaders-announce-surprise-billing-agreement

2. https://www.ama-assn.org/delivering-care/patient-support-advocacy/proposed-no-surprises-act-favors-commercial-health-plans

The U&C Gap Keeps Rearing Its Ugly Head

On December 8, 2020

By: Jon Jablon, Esq.

There’s no question that most health plans can’t remain viable without a stop-loss policy in place. The plan and stop-loss carrier share a common goal, which of course is cost-containment. Since the two types of coverage provided are so different, however, the brand of cost-containment that each uses is often vastly different – and when two companies are trying to contain costs on the same claims, things can get ugly if they say different things.

Many stop-loss carriers have antiquated notions of what should constitute U&C. Common definitions include the old “usual charge in the area” language or some variation thereof, but many carriers have taken their policies into the modern age and use multiples of Medicare for their allowable amounts. In theory, this makes sense; just like a plan needs to determine what amounts are reasonable for it to pay for claims, so does a stop-loss carrier. However, plans should consider that their carrier’s idea of what is reasonable may not align with their own.

Admittedly, this is not the first time we have brought up this topic of so-called “gaps” in U&C language between a plan and a stop-loss carrier. That’s because this issue continues to be relevant, and what’s worse, payors are often surprised by stop-loss denials when they didn’t think they had any reason to worry.

The best example is when the plan is subject to a PPO contract, which most still are. The plan is contractually bound to pay the network rate, and cannot limit its payment based on a percent of Medicare or other factors; instead, it must pay providers the established contractual network rate. The stop-loss policy, however, doesn’t reference the PPO rate, instead saying that it will pay the lesser of (a) 200% of Medicare or (b) the usual charge in the area. Again – no mention of the PPO rate.

As is generally the case, and as is the impetus for the reference-based pricing boom, PPO discounts or DRG rates are far higher than what is considered reasonable by most payors, and are almost always higher than 200% of Medicare. The fact remains, however, that a plan subject to an applicable PPO agreement may be bound to pay those network rates, however unreasonable they may be considered. The carrier is not subject to the PPO agreement, however, and is free to disregard its terms – hence capping its own allowable based on Medicare or other factors.

So, what happens? The plan pays the network rate – billed charges less a meager percentage, usually – and the carrier adjudicates the claim without regard to the terms of the network contract, and allows its claim at 200% of Medicare. That leaves a hefty gap between what the carrier will reimburse and what the plan has paid – and in some instances the carrier’s opinion of the plan’s allowable amount may not even rise to the level of the specific deductible, rendering the claim denied in full since it hasn’t met the attachment point.

If this has never happened to you, good – but The Phia Group is in a prime position to have seen these issues pop up over and over again. In fact, one group even sued The Phia Group because the group’s stop-loss carrier denied a claim for this exact reason! It could be funny if it weren’t so sad.

Moral of the story? As we so often implore… read your contracts. Make sure you understand what your carrier is going to pay, and not pay, and how that aligns with the allowances in the SPD. It might surprise you what you find.

Feel free to contact us at PGCReferral@phiagroup.com if you’d like some assistance.

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.

New Rules on Prescription Drug Importation Are Released – Or Are They?

On August 11, 2020

By: Andrew Silverio, Esq.

On July 24, 2020, the White House issued an “Executive Order on Increasing Drug Importation to Lower Prices for American Patients” as part of a handful of executive orders aimed at drug costs (available at https://www.whitehouse.gov/presidential-actions/executive-order-increasing-drug-importation-lower-prices-american-patients/).  At first glance, the order seems to take sweeping steps to facilitate the importation of prescription drugs, but does any of it really represent a departure from existing law?  The order specifically orders the Secretary of HHS to take action in three ways:

  1. Facilitate waivers to individuals against the prohibition on importation, “provided such importation poses no additional risk to public safety,” pursuant to section 804(j)(2) of the Federal Food, Drug, and Cosmetic Act (FDCA);
  2. Authorize the re-importation of insulin products upon a finding that doing so is required for emergency care; and
  3. Complete the rulemaking process started by the proposed rule (more information below) to allow importation of certain drugs from Canada.

As it relates to the first item, it’s clear that this does not represent any new law or authority.  Under section 804(j)(2) of the FDCA, “The Secretary may grant to individuals, by regulation or on a case-by-case basis, a waiver of the prohibition of importation of a prescription drug or device or class of prescription drugs or devices, under such conditions as the Secretary determines to be appropriate.”  This order is simply an instruction to utilize said authority, and it is not clear how or whether these waivers would differ from the existing FDA policy of enforcement discretion, which is quite broad and under which individuals are rarely prosecuted for importing prescription drugs for personal use.  The important caveat that the importation must pose “no additional risk to public safety” suggests that there may be no real change at all, as this is one of the biggest factors in the FDA’s existing policy of enforcement discretion, and the key element cited by the FDA and pharmacy stakeholders in pushing back against importation.

In regard to the second item, the specific inclusion of insulin is interesting, and perhaps represents the most significant element of this order.  The proposed rules outlined in 2019 by the FDA and HHS did not specifically include insulin (available at https://www.hhs.gov/about/news/2019/07/31/hhs-new-action-plan-foundation-safe-importation-certain-prescription-drugs.html), and the drug’s special storage and safety requirements are a barrier to its inclusion in existing avenues of importation.

While we’re on the topic of the proposed rule, the third item in the executive order is nothing more than an instruction to continue that rulemaking process.  So, is this order a dramatic step toward real federal action allowing drug importation, or just a token announcement that doesn’t really accomplish anything?  Unfortunately, it’s simply too early to tell, and we will have to wait and see what HHS does in response.  It is worth noting that when the proposed rule came out, it was met with harsh criticism from our northern neighbors, many of whom discussed potential action by the Canadian government to counter any such importation efforts in order to protect their own drug supply.  As such, action taken  by the United States in regard to Canadian drug importation won’t be the only factor in whether the practice ultimately becomes both legal and practical.

Empowering Plans: P85 - Catching up with the Courts

On July 10, 2020

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.

Click here to check out the podcast!  (Make sure you subscribe to our YouTube and iTunes Channels!)

WC Recovery in a Post COVID World!

On May 6, 2020

By: Chris Aguiar, Esq.

There are so many fascinating things to debate in what can only be described as perhaps the strangest times we as a society have collectively endured. Should we open the economy at the expense of American lives? Does the data even support this notion that social distancing makes a difference? How could the models have been so far off their original projections? How did the current administration do with respect to its response? It would be disingenuous to say that these are not topics in which I am interested, but in terms of the day to day business of a subrogation professional (and in the context of this blog), I’m thinking much more in the weeds.

The immediate question a lot of our subrogation clients are asking is quite simply, what is the rule regarding workers' compensation claims with respect to this pandemic? Will medical professionals, first responders, and even essential employees be able to make claims for workers' comp? One’s gut reaction might be to say, “of course they can!” – But deeper analysis requires a bit more nuanced thinking.

The success of every injury claim, be it an auto accident, a work injury, or medical malpractice, rests on a critical element of proving negligence – causation! How does one prove that they contracted the virus as a result of working with a person infected with COVID-19, rather than when they stopped at the grocery store on the way home from their shift? With a virus that the media would lead you to believe is so potent that the mere act of stepping outside your door will leave you at significant risk, how are we to know what actually “caused” that person to contract the virus? It would be virtually impossible to tie the contracting of the virus to one single event – accordingly, the theoretical answer lies in the concept of “presumptive illness”. The practical answer, as is so often the case with legal discussion, is, well, “it depends.”

Every state has different definitions of “presumptive illness” - a presumption that one who works closely with those who are ill, such as medical personnel and first responders, contracted the illness within the scope of their employment. Furthermore, every state defines the class of employees who are eligible for the presumption differently (e.g. which “essential employees” are eligible for the presumption?). Additionally, many states are currently reviewing their laws and determining whether to make a change to specifically address the current pandemic and what employees on the front lines are able to claim. Needless to say, as with everything related to COVID-19, it is a quickly developing situation. At this time, whether a plan participant is eligible for worker’s compensation benefits depends on the type of work they do, and whether that state already provides for this presumption. If it doesn’t, states will need to add this presumption in order to allow workers to access these benefits.

Anyone who has questions can feel free to reach out to our team for more information at info@phiagroup.com.

Bouncing Through Quarantine

On May 4, 2020

By: Nick Bonds, Esq.
 

While some of the United States is tentatively beginning to reopen, much of the country remains firmly under social distancing orders. The ripple effects of keeping people cooped up with their families vary wildly, but many are reveling in the extra time spent together, and are finding numerous ways to stay sane and entertained in the face of the Covid-19 pandemic.
 

Some of this has led to fairly predictable shortages, but there are reasons for hope. Aside from the struggle of grocery stores (and even a few global online retail-giants-who-shall-not-be-named) to keep toilet paper, disinfectant wipes, and hand sanitizer in stock, the fact that our stores’ shelves have been rendered entirely barren should be seen as a testament to the resilience of our modern supply chain.
 

Nonetheless, there are a number of things you just can’t find right now. Toilet paper remains scarcer than I’d like it to. The meat case at my local store has been pretty sparse of late. You probably can’t buy a Nintendo Switch from a traditional retail outlet at MSRP to save your life right now. And, spurred by the hordes of energetic youths with no safe outlet for their boundless energy, trampolines are flying off of shelves.
 

This got me thinking… plenty of people find perfectly mundane ways of injuring themselves in the home. Sure, social distancing keeps us safe from the coronavirus, and protects us in plenty of other ways. Fewer drivers on the roads means fewer car accidents. Fewer kids playing peewee football means fewer broken collarbones. But as a former kid myself, I can tell you: we will find a way to injure ourselves, trampoline or no. And fear of the coronavirus may well make people wary of visiting an emergency room (preferably an urgent care clinic), even when truly necessary, exacerbating injuries and prolonging the healing process. This will almost certainly lead to higher claims costs for plans down the line.
 

All this to say, it is imperative that we all keep up with our personal well-being in this time of social distancing. If anything, this pandemic may help all of us maintain a greater awareness of our personal health. Companies that encourage telemedicine can help their employees build a rapport with their healthcare providers, leading to better health outcomes and ultimately saving plans money. Keeping ourselves and our families mentally and physically engaged throughout this time will keep us all healthier and saner until we can finally go to our offices again. If it takes a videoconference with your doctor (or a trampoline/black-market videogame console) to make that happen, maybe it’s worth it.

The Difference – Healthcare vs. Insurance; Never Clearer

On March 16, 2020

By: Ron E. Peck, Esq.

For those who have followed my social media posts in the past, you’ll know that one issue I can’t escape is the constant political rhetoric regarding “healthcare,” and in particular, how politicians (and the general populace) refer to “healthcare” but in fact are referencing health insurance.  When they talk about the cost of healthcare, they don’t mean how much the provider charges for the care they provide.  Instead, they are referring to the premiums, co-pays, and deductibles for which the patient will be responsible out-of-pocket.  Those aren’t the costs of healthcare; they are the costs of health insurance.  I’ve said before, and will say again, health insurance can’t stich a cut or reduce a fever.  Health insurance isn’t healthcare; it’s one way by which we pay for healthcare.

This point has never been more clearly defined than by the current COVID-19 pandemic.

Note how the national dialogue is no longer about out of pocket expenses.  Instead, the public outcry is over a lack of testing kits.  People aren’t worried about their deductible; they are worried about being infected, and what they need to do to remain in relatively good health.  See how people are focused less on how much a cure “costs” and more about when a cure will exist?  Indeed – now that we truly need “health care” and not “health insurance,” people seem to understand what healthcare is, and what it isn’t.

When the dust settles, and the costs are tallied, we will need to determine who pays what to whom.  Until that time, however, the priority for all of us is to seek, improve, and prioritize health (our own and others) and healthcare – actual, true, health care – both quality of care, access to care, and effectiveness of care.

Until then, this global crisis has taught us:

  • Issues with the cost of healthcare boils down to the cost of the actual care.
  • Issues with the efficacy of healthcare boils down to the effectiveness of the actual care.
  • Issues with access to care boils down to actual access to care.

With no vaccine available, and a pandemic impacting everyone indiscriminately – from Celebrity Tom Hanks to Taxi Driver Hank Thomas – we suddenly understand that, when push comes to shove, it doesn’t matter who is paying for your healthcare, so much as whether healthcare itself is available.   Perhaps this will help us appreciate that only health care is health care, you can’t cure anything with the card in your pocket, and ultimately healthcare is expensive because health care is expensive.  It is tragic that it took something this extreme to open eyes and help people understand that on a debate stage we can pretend “health insurance” is healthcare… but when we are sick, only health care is healthcare.

New Insight on Provider Surprise Billing

On February 17, 2020

By: Andrew Silverio, Esq.

Anyone who works in health benefits is familiar with surprise billing – the specific kind of balance billing which occurs when a patient visits an in-network physician or hospital, and receives an unexpected balance bill from an out-of-network provider that they didn’t have an opportunity to select, and in many cases, didn’t even know they had utilized.  Common culprits are anesthesiologists, assistant surgeons, and outside lab work.

We often think of this as primarily a problem for emergency claims.  This makes a great deal of sense, since when someone presents at an ER or is brought there via ambulance, they likely won’t have an opportunity to ask questions about network participation or request specific providers.  However, according to surprising data released in the Journal of the American Medical Association on February 11, 2020 entitled “Out-of-Network Bills for Privately Insured Patients Undergoing Elective Surgery With In-Network Primary Surgeons and Facilities (available at jamanetwork.com/journals/jama/fullarticle/2760735?guestAccessKey=9774a0bf-c1e7-45a4-b2a0-32f41c6fde66&utm_source=For_The_Media&utm_medium=referral&utm_campaign=ftm_links&utm_content=tfl&utm_term=021120), these bills don’t actually seem to be more likely to arise from emergencies or other hospital stays where patients have less of an opportunity to “shop around.” 

The study looked at 347,356 patients undergoing elective surgeries, at in-network facilities with in-network surgeons.  These are patients who had ample opportunity to select their providers, and indeed did select in-network providers for both the surgeon performing their procedure and the facility in which it would occur. Shockingly, over 20% of these encounters resulted in a surprise out of network bill (“Among 347 356 patients who had undergone elective surgery with in-network primary surgeons at in-network facilities . . . an out-of-network bill was present in 20.5% of episodes...”) The instances that involved surprise bills also corresponded to higher total charges - $48,383.00 in surprise billing situations versus $34,300.00 in non-surprise billing situations.

The most common culprits were surgical assistants, with an average surprise bill of $3,633.00, and anesthesiologists, with an average bill of $1,219.00.  In the context of previous research indicating that “20 percent of hospital admissions that originated in the emergency department . . . likely led to a surprise medical bill,” it seems that even when patients are able to do their homework and select in-network facilities and surgeons, they are just as susceptible to surprise billing. (See Garmon C, Chartock B., One In Five Inpatient Emergency Department Cases May Lead To Surprise Bills. Health Affairs, available at healthaffairs.org/doi/10.1377/hlthaff.2016.0970.)

Many states have enacted protections against balance billing and surprise billing, with Washington and Texas both recently enacting comprehensive legislation.  However, these state-based laws have limited applicability, and there are to date no meaningful federal protections for patients in these situations.  Until such protections are enacted, patients are left vulnerable to sometimes predatory billing practices, and plans are left to choose between absorbing that financial blow or leaving patients out in the cold.

A Simple Mistake with Big Consequences: Is Your HDHP Actually HSA-Qualified?

On February 5, 2020

By: Kevin Brady, Esq.

Every week, we seem some variation of the question: Will this program impact our HSA-Qualified HDHP status? The programs in question often include direct primary care, telemedicine, managed care, or some combination thereof. The answer, often to the disappointment of groups hoping to provide more value to their participants, is that these types of programs can often run afoul with the Internal Revenue Service’s strict requirements on High Deductible Health Plans (HDHP).

An HDHP must meet certain criteria to allow individuals enrolled to contribute to Health Savings Accounts (HSA). The problem arises when an HDHP no longer meets that criteria and therefore loses is qualified status.

For purposes of utilizing a HDHP with an HSA, the HDHP must comply with IRC § 223(c)(2). This section of the code provides the minimum deductible and the maximum out-of-pocket expenses required for a plan to be considered an HDHP. For example, in 2020, the minimum deductible was set at $1,400 for self-only coverage and $2,800 for family coverage. Further, a Plan considered an HDHP cannot contribute to the costs of non-preventive services until an individual’s deductible is met, and the participants cannot be enrolled in other health coverage as defined by the IRS.  (See here for more information: Pub. 969)

So, when a client asks us the inevitable question, “will this program impact our HSA-Qualified HDHP status?” We typically look to determine two things; 1. Does the program inherently require the Plan to contribute to the cost of non-preventive services pre-deductible; and 2. does the program constitute other health coverage?

While it certainly requires a full and complete understanding of the proposed program, it has been our experience that the answer to at least one of these questions is often yes.

When these types of programs are included as benefits within the Plan, it often opens the door for the Plan to pay for non-preventive services before an individual’s deductible has been satisfied. Conversely, when the program is offered outside of the Plan, it often constitutes “impermissible other coverage” which renders individuals who are enrolled in both the program and the HDHP ineligible to contribute to their HSA.

If an individual makes contributions to their HSA during a period in which they are not eligible to do so, it could result in massive tax consequences for that individual and could also cause tax consequences on employers who contribute that individual’s HSA as well.

With the current guidance in place, it is difficult for groups to implement these types of alongside or within their HDHPs. This is unfortunate because the programs can often add enormous value for participants and also result in significant savings for Plans.

Luckily, in June of 2019, an Executive Order directed the Secretary of the Treasury to issue regulations to clarify the issue as to whether these types of programs can be offered within or alongside HDHPs without jeopardizing a participant’s ability to contribute to their HSA.

Given the Executive Order, and similar legislation making its way through Congress, we are hopeful that there will be new guidance to allow the expanded use of these types of programs with HDHPs in the new future. Until then, it is best to err on the side of caution and confirm that a proposed program doesn’t conflict with the IRS rules before implementing it into your benefits offerings.