Other components of the Health Rosetta outline proven approaches to slaying the healthcare cost beast. The healthcare industry uses a variety of tricks to redistribute money from employers and taxpayers into their coffers. Highly effective benefits leaders use the Health Rosetta as the antidote to the plague of an under-performing healthcare system. Health Rosetta certifications will be market-driven and are loosely analogous to LEED and Fair Trade (click links for how the analogies are applied to healthcare) to accelerate the movement to a higher-performing system.
Other components of the Health Rosetta include the following:
- Value-based Primary Care
- Transparent Medical Market
- Transparent Pharmacy Benefits
- Concierge Style Employee Customer Service
This contribution to the Health Rosetta addresses the necessary items to have an ERISA plan that will ensure the Plan Administrator (the fiduciary) fully adheres to the fiduciary duties. Falling short can put the Plan Administrator at personal financial liability. At stake are millions of dollars for a moderate size self-funded plan.
As high deductible plans become mainstream, plan beneficiaries are paying closer attention to medical bills. We have already seen cases against large employers and the health insurance companies that are serving as their third-party administrator (TPA).
Naturally, one should consult with their own ERISA attorney. These should be considered general guidelines. Follow the link below to a leading ERISA law firm that contributed their expertise to this component of the Health Rosetta.
I. Allowable Payment Amounts
“Usual and Customary” or analogous language is by far the most common way that health plans cut costs. Definitions of this term vary from plan to plan, and fall somewhere on the spectrum of very weak to very strong. Ideal language allows the Plan Administrator to pay the lesser of certain amounts based on costs, Medicare allowable amounts, etc. – although if a negotiated rate exists, that should always be paid to avoid breaching a network or direct contract that has been signed.
Although any claim can potentially be negotiated, if the Plan Document does not have language permitting negotiation (and falling back to low Usual and Customary rates in the absence of a negotiation), the negotiation becomes much more difficult.
Wrap networks accessed by plans can result in little cost-savings with high fees. For this reason, we recommend an unwrapped service, which helps the plan define a reasonable and fair market value-based allowable amount for all out-of-network claims – including those that would otherwise be sent to wrap networks – with defensible claims repricing, patient advocacy, and back-end balance-billing support to boot.
In addition, any claim at all can potentially be negotiated, with the right tools – even in-network claims in many instances.
II. Experimental or Investigational
Strong Experimental language would reference industry-standard criteria, accepted medical practice, service rendered on a research basis, clinical trials, peer-reviewed literature, etc.
Noteworthy facets of this language that are sometimes brought into question include off-label drugs and compound drugs. The Plan should clearly state how it will treat such claims.
III. Medical Necessity
When present, this language is typically fairly standard, and as long as it determines medical necessity based on objective criteria, it should be acceptable. Ideal criteria include being treatment meant to restore health, not maintenance or custodial in nature, disallowed by CMS, and otherwise appropriate under the circumstances according to the AMA or other sources.
Make sure the language does not leave the determination of medical necessity to the discretion of the treating provider; the Plan Administrator should always retain this discretion.
IV. Plan Administrator Discretion
While every plan document necessarily gives the Plan Administrator discretion to determine payment amounts, watch out for instances where a Plan Administrator has too much, or not enough, discretion. Discretion should be granted to the Plan Administrator to interpret the Plan Document’s provisions and determine issues of fact related to claims for benefits.
Some Plan Documents grant the Plan Administrator discretion to cover anything even if it’s not otherwise covered – but watch for instances where the Plan Administrator has the discretion to cover nearly anything it deems appropriate. While that is beneficial for the Plan, applying such a provision may well cause a stop-loss reimbursement issue.
V. Fiduciary Duties
For both self-funding veterans and those new to the industry, managing the fiduciary duties associated with making claims determinations can be a daunting task.
Outsourcing fiduciary duties for final-level internal appeals is the most efficient and cost-effective way of handling this responsibility. For this reason, leading ERISA firms provide an approach that shifts the fiduciary burden of handling final-level appeals onto a neutral third-party, which assumes the risk for the determination.
VI. Coordination of Benefits
If the Plan pays as primary, no matter what, that is a cost-containment problem. The Plan should pay secondary in all conceivable situations (with the exception of Medicare or when otherwise not permitted).
Ideal language will describe certain circumstances of primary and secondary coverage, and which plan pays primary/secondary in such circumstances, as well as a statement clearly identifying that the health plan pays secondary whenever legally permissible.
VII. Leaves of Absence
Many health plans provide coverage for any period of approved leave as determined by the employer. This can translate into individuals being afforded leave of absence coverage by the plan based solely on “internal” leave policies of employers, which are sometimes not even written polices, or are determined on a case-by-case basis by the employer, fully outside the terms of the Plan Document.
While this is not a problem for the Plan Document per se, it is an extraordinarily common problem when it comes to stop-loss reimbursement for claims incurred while an employee is on such an approved leave of absence.
VIII. Employee Skin in the Game
Some employers elect to offer members certain incentives for performing tasks such as choosing certain providers over others, auditing bills for correctness, purchasing durable medical equipment online at discounted rates rather than from hospitals, etc.
Typical rewards include offering the member a percentage of savings achieved by the Plan or paying benefits with no member responsibility (i.e. waiving coinsurance and deductibles).
One of the most commonly-used situational exclusions is for claims resulting from “illegal acts.” The absence of such an exclusion can greatly increase claims exposure; there are also different ways to structure this exclusion that can increase or decrease the potential for exposure.
Another important exclusion is for claims resulting from “hazardous activities.” This type of exclusion is designed to ensure that the Plan is not responsible for claims that result from activities with an increased likelihood of injury.
X. Overpayment Recovery and Third Party Recovery
In addition to partnering with a recovery vendor that excels at enforcing the Plan’s rights, the Plan Document must contain strong language describing the Plan’s reimbursement rights to begin with. Without the combination of strong rights and an elite recovery vendor, the Plan cannot possibly maximize its recoveries. Provisions to look for within a third-party recovery provision include:
Disclaimer of the “made-whole” and “common fund” doctrines (or analogous terms).
Ability to recover from estates, wrongful death proceeds, and the legal guardians of minors.
Ability to offset any funds recovered by the patient but unpaid to the plan.
XI. Compliance and General Drafting
Needless to say, the terms of the Plan Document must be compliant with applicable law – including ERISA, HIPAA, COBRA, and many others, in addition to any applicable state law.
Some in the industry feel that the Plan Document and Summary Plan Description must be separate documents, but leading ERISA attorneys are of the opinion that one single document suffices for both.
The terms of the Plan Document must be consistent and clear; the terms should of course not be ambiguous, but that should still allow for some interpretation by the Plan Administrator.
Checklist provided courtesy of the Phia Group, a law firm with deep experience writing ERISA plans.
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