Web 05172018 Health Plan Hot Spots

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© Alston & Bird LLP 2018
Health Plan Design and Administration
Challenges: Hot Spots
Prepared by Steven C. Mindy, Esq.
Alston & Bird, LLP
May 17, 2018
1

© Alston & Bird LLP 2018 2
Agenda
 Future of employer sponsored health care (update from last year)
 Mental health and substance abuse “parity”—what is parity exactly and what
are the traps/pitfalls
 Emergency Services—Where do emergency services have to be provided and
what is the allowed amount for emergency services?
 Imposing service and treatment limits—what are the challenges?
 Wellness program traps and pitfalls
2

Agenda
 Out of Network Provider Payments—how should allowed amount be
calculated and how do I document that?
 Cross Plan Offsetting—What is it and can you do it?
 Responding to requests for documents from third parties—to whom, when,
and what.
 HIPAA Privacy and Security Audits—how to avoid and how to prepare for them
3

Agenda
 Regulatory roundup
 Other litigation trends
4

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Mental Health and Substance Abuse Parity?
What is parity exactly and what are the traps/pitfalls?
5

Benefits Subject to MHPAEA
 Scope of the rule:
 “Mental Health Benefits” and “Substance Abuse Benefits”
 Neither term specifically defined in rules; Plan gets to define generally
 Definition in plan must be consistent with applicable federal and/or
state law AND must be consistent with generally recognized
independent standards of current medical practice
 Are benefits for autism “mental health benefits”?
 Does not specifically require plans to cover MH or SA benefits but . . .
 If you provide mental health/substance abuse benefits in one category,
you must provide them in all categories in which you provide
medical/surgical
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Financial and Quantitative Limitations
 A plan may not apply any financial requirement or [quantitative]
treatment limitation to MH or SA benefits in any category that is:
 More restrictive that the predominant financial requirement or treatment
limitation applied to substantially all medical/surgical benefits in the same
category
 2 tests for measuring benefits:
 predominant
 substantially all
 Special rule for prescription drugs
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Measuring Benefits
 Measure benefits within a category
 Identify “types” of financial requirements/treatment limitations
 Copayment
 Coinsurance
 Days limit
 Treatment limit
 Identify levels
 Determine expected plan benefits for plan year for benefits subject to a type
of financial requirement/treatment limitation in each category
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Measuring Benefits
 Based on amount the plan “allows”—not on what it pays specifically.
 Any reasonable method may be used
 Do not have to recalculate each year if no plan design changes that
would affect financial requirement/treatment limitation
 Determine first by type of limitation (this is for purposes of
substantially all test)
 Then determine by “level” (this is for purposes of predominant test)
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Measuring Benefits
 Issues:
 TPA or carrier using claims for entire book of business to calculate substantially
all/predominant
 Permitted in very limited instances
 Assuming that mental health/substance abuse provider is a “specialist” when
you analyze outpatient services
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Non-quantitative Treatment Limitations
 General rule: a plan may not impose a non-quantitative treatment
limitation with respect to MH/SA benefits in any classification unless,
under the terms of the plan OR IN OPERATION, any processes,
strategies, evidentiary standards (Standards) or other factors used in
applying the nonquantitative treatment limitation to MH/SA are
comparable to the Standards applied to medical/surgical and are
applied no more stringently to MH/SA
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Non-quantitative Treatment
Limitations
 Medical management standards limiting or excluding benefits based on medical necessity or medical
appropriateness, or based on whether a treatment is experimental or investigative;
 Formulary design for prescription drugs;
 Standards for provider admission to participate in a network, including reimbursement rates;
 Plan methods used to determine usual, customary, and reasonable fee charges;
 Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also
known as fail-first policies or step therapy protocols);
 Prior authorization; and
 Exclusions based on failure to complete a course of treatment.
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Non-quantitative Treatment Limitations
 Issues:
 No prior authorization on medical/surgical but prior authorization required for
mental MH/SA
 Prior authorization required in practice after 7 days of inpatient care for
medical/surgical but after 1 day for MH/SA
 Medical/surgical provider/facility need only be licensed but MH/SA
provider/facility must be licensed and _________ (fill in the blank)
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Disclosure of Medical Necessity Requirements
 Criteria for Medical Necessity must be made available to any current or
potential participant/beneficiary or contracting provider upon request
 Broader than just claims procedure rules
 I.e. this requirement not limited to requests made in accordance with claims
determinations and appeals
 104(b)(4) document—subject to $110 per day penalty if not provided
within 30 days.
14

Regulatory and Legislative Developments
 Cures act:
 Clarified that eating disorder is a mental health condition
 Medical necessity disclosure requirements and model forms
 Proposed FAQ and Self compliance tool
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Emergency Care
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Emergency Care
 Calculating the out of network “allowed amount”
 Greater of:
 Median network rate
 Medicare rate
 The Plan’s typical rate (e.g. R&C)
 How do you calculate network rate?
 What is R&C?
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Emergency Care
 If a plan provides benefits for any services in an emergency
department of a hospital, the plan must provide coverage
for emergency services in accordance with the following
requirements:
 No prior authorization
 Without regard to whether in-network or not
 Same cost sharing for out of network
 Special rules for calculating the allowed amount
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 Are you required to provide coverage for coverage provided in a
freestanding emergency center?
 Maybe not.
 The rule applies to plans that provide benefits for services provided “in
an emergency department of a hospital”
 The definition of “emergency services” and “emergency medical
condition” are based on EMTALA definitions
 EMTALA would only apply to dedicated emergency departments owned
and operated by Hospitals (as a threshold matter)
19
Emergency Care

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Service and Treatment Limitations
20

Treatment Limitations
 Self funded plans are not required to provide essential health benefits
 But, if a plan provides essential health benefits, the plan may not impose
annual or lifetime dollar limitations on essential health benefits
 What is an essential health benefit?
 Pick a benchmark plan in a state (no nexus to the plan required apparently)
 If covered by that plan, then it is an essential health benefit (with a few
exceptions)
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Treatment Limitations
 Are service/treatment limitations on essential health limits
permitted?
 Yes!
 Be careful of traps:
 Service limit combined with a per day $ limit=annual
dollar limit
 Mental health/substance abuse parity rules
 ADAAA
 HIPAA nondiscrimination
22

Wellness Program Traps
 HIPAA/ACA rules:
 All outcome based programs must offer a reasonable
alternative to those who are unable to satisfy the initial
standard
 Must provide notice of reasonable alternative in ALL wellness program materials
 Must give a reasonable period of time to complete alternative
 Cannot require them to meet the initial standard
 Can’t make tobacco users quit!
 Must make reward available for entire year IF they satisfy the standard
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Wellness Program Traps
 GINA/ADA
 Can’t give incentive for dependent Child’s medical history
 Disease management programs with incentives could be a problem
 Also a potential problem under HIPAA
 Future of incentives under ADA/GINA in question vis a vis AARP case
24

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Out of Network Provider Payment Issues
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 Dispute over method of calculating
 OON providers claim plans use artificially low benchmarks to
calculate allowed amount
 Several cases over the last few years:
 North Cypress v. Cigna
 United Healthcare settlement (Downey Surgical Clinic vs.
OptumInsight, Inc.)
 Ingenix
26

 How do you protect against such claims:
 Clear unambiguous terms in plan documents
 SPDs/documents often fall short on adequately describing “reasonable and customary”
 Often refer to claims administrators policies and procedures
 Follow the plan/procedures
27

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Cross Plan Offsetting
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 Participant in Plan #1 receives services at Doctor A’s office. Claims Administrator,
ABC, overpays Doctor A by $100.
 Plan/Claims administrator provides notice of overpayment. Doctor A disputes
it.
 Participant in Plan #2 that is administered by ABC receives services at Doctor A’s
office. Eligible benefits for services equals $200; however, ABC only pays Doctor A
$100. The additional $100 in eligible benefits offsets the overpayment made by
ABC to Doctor A with respect to participant in Plan #1.
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 8th
circuit case filed against United Healthcare
 Issues generally (not necessarily raised in 8th
circuit case)
 Possible violation of claims procedure rules
 Exclusive benefit violation/prohibited transaction
 Breach of fiduciary duty
 Arguments made that proper language in plan document cures.
 Does it?
 What about intra-plan offsetting?
30

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Responding to Requests for Documents
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 ERISA Section 104(b)(4) requires plan administrators to furnish
the following to participants and beneficiaries:
 Most recent SPD
 Most recent Form 5500
 Trust agreement
 CBA
 contract or other instruments under which the plan is
established or operated
 $110 per day penalty for failing to furnish within 30 days of
request
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 Who is a participant?
 Employee or retiree or authorized representative of either
 Who is a beneficiary?
 Dependent covered under plan
 Third parties who are “authorized” by a beneficiary
 Providers with assignments
 Network providers even without assignments
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 ERISA Section 503
 All documents and information that are “relevant” to the claim
 Relied on
 Generated but not relied on
 Demonstrates compliance with procedures
 Statement of policy or guidance with respect to the plan concerning the
denied treatment
 Claimant and any authorized representative
 Consequences of failing to provide:
 Lower standard of review/lose exhaustion defense
 Is there a $ penalty for failing to provide such documents?
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 Controversial documents:
 ASO agreement
 Policies and Procedures documents/guidelines
 E.g. UCR
 Meetings of committee minutes
 Emails between claim fiduciary and counsel
35

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HIPAA Privacy and Security Compliance
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How do you avoid?
 To some extent you cant!
 OCR has audit programs
 OCR may audit based solely on a complaint
 Mitigation techniques
 Train
 Take conservative approach with uses/disclosures
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How to Prepare
 Maintain policies and procedures
 SECURITY RISK ASSESSMENT!!!!
 A gap assessment is not a risk assessment
 Train
 Make sure you have business associate agreements (and sub-baa) in
place
38

Litigation Traps
 Failing to follow amendment/termination procedures
 Right of termination/amendment not in appropriate documents
 Not properly notifying participants of changes in plan
 Failing to furnish electronic SPDs properly
 Not following plan terms
 Failing to identify the claims fiduciary in plan documentation
 Provider non-discrimination
39

Regulatory and Legislative Roundup
 HSA contribution limit
 Recent IRS guidance regarding 2018 contribution adjustment
 Disability regulations went into effect April 2
 Proposed Association Health Plan Regulations
 Recent DOL proposed FAQ, enforcement facts, and self-compliance
tool
 Will the IRS issue new HRA guidance (per the executive order)?
40

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