Monday, August 14, 2017

Yes, You Must Add Employee Benefit Opt-Out Payments Into Total Compensation for Overtime Calcs

If you are an employer within the jurisdiction of the Ninth Circuit Court of Appeals and offer cash payments to employees who opt out of group health coverage (“opt-out payments”), what you don’t know about the court’s 2016 opinion in Flores v. City of San Gabriel may hurt you.0 
Specifically, the Ninth Circuit court held that opt-out payments had to be included in the regular rate of pay used to calculate overtime payments under the federal Fair Labor Standards Act (FLSA). In May 2017 the U.S. Supreme Court declined to review the opinion, making it controlling law within the Ninth Circuit, and hence in the states of Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington. 
The Flores case arose when a group of active and former police officers in the City of San Gabriel sought overtime compensation based on opt-out payments they received between 2009 and 2012 under a flexible benefits plan maintained by the City. The plan required eligible employees to purchase dental and vision benefits with pre-tax dollars; they could also use the plan to purchase group health insurance. Employees could elect to forgo medical benefits upon proof of alternative coverage; in exchange they received the unused portion of their benefits allotment as a cash payment added to their regular paycheck. The opt-out payments were not insubstantial, ranging from $12,441 annually in 2009 to $15,659.40 in 2012. The City’s total expenditure on opt-out payments exceeded $1.1 million dollars in 2009 and averaged about 45% of total contributions to the flexible benefits plan over the three years at issue. ...
Full column.

COBRA and Severance Agreements – Think Twice Before Wading Into This Mess

From Hill, Chesson & Woody:
Employers sometimes allow former employees to remain on their health insurance plan for some period of time after termination of employment at no cost or reduced cost to the terminated employee. While this may seem like a generous offer to include in a severance agreement, there can be unintended consequences for both the employer and the former employee if not handled correctly. Questions often arise regarding the interaction of severance agreements and health benefits. 
3 tips for employers contributing to or continuing a terminated employee’s health insurance:
  1. Educate the terminating employee about their coverage options. Make sure that the individual understands that if they accept your offer of COBRA coverage, they may not be able to purchase individual coverage through the Marketplace until the next Marketplace annual enrollment. Individuals who lose job-based coverage generally have 60 days to purchase coverage through the Marketplace. If they stay on COBRA beyond the Special Enrollment Period, they could lose that option. Maintaining COBRA coverage (at a higher cost than Marketplace coverage) until other employer-sponsored coverage becomes available or the next Marketplace annual enrollment could be the individual’s only option for avoiding a gap in coverage and tax penalties. 
  2. Offer the terminating employee COBRA. If the individual is left enrolled as an active employee, fully-insured employers may risk violating the medical plan eligibility requirements in their insurance contract. Similarly, self-funded employers may violate the coverage provisions of their stop-loss agreement. Consequently, failure to offer COBRA can expose an employer to significant financial liability for claims not paid by an insurance carrier or stop-loss insurer. Also, it ensures that coverage obtained through a new employer will pay primary to COBRA coverage. If you want to pay all or a portion of the individual’s coverage, work with legal counsel to draft a severance agreement that includes an employer contribution to offset the cost of COBRA coverage.
  3. Pay the COBRA premium directly. If the severance agreement includes an employer contribution toward the cost of COBRA coverage, minimize tax consequences by paying the COBRA premium directly to the plan instead of reimbursing the former employee. COBRA premium payments are not treated as taxable wages if made by the employer directly, or if the employer requires verification of or retains control over the purchase of COBRA coverage (such as requiring substantiation of the month’s premium payment prior to providing reimbursement). If you offer a terminated employee cash to purchase their own individual health insurance as part of a severance agreement, use caution. Although this might seem to provide the terminated employee with greater flexibility to choose the type of health insurance coverage that best fits their needs, it may result in the creation of a new ERISA group health plan and additional excise tax liability, among other compliance obligations. ...
Full story

What Changing Medical Carriers Does to Your Short-term Utilization

From the National Institute for Health Care Management:
  • Visits to new primary care physicians (PCPs) increased significantly for patients changing insurers relative to patients staying with the same insurer.
  • For patients initially covered by Medicaid, the monthly rate of visits to new PCPs increased by an average of more than 200 percent after changing insurers, and their rate of visits to new specialists rose by almost 50 percent.
  • For patients initially covered by private insurance, changing carriers was associated with a nearly 50 percent increase in new PCP visits while visits to new specialists fell slightly. The overall decline in new specialist visits was caused by lower use among patients who faced higher deductibles after changing plans.
  • These average utilization changes reflected larger changes in use shortly after the insurance switch that diminished over the subsequent year.
  • The rate of ED visits increased significantly for Medicaid patients in the month of their insurance transition, relative to levels seen in the four to twelve months before the transition, but quickly returned to baseline levels.

Friday, August 4, 2017

Another ACA Lie - Preventative Care Actually Does Not Save Money

...the commonly held, but mostly false, belief that more preventive care will reduce overall health care costs.
As counterintuitive as it seems, preventive measures generally increase rather than decrease costs. This in no way suggests that we shouldn’t pursue preventive measures. It simply means that we shouldn’t spend time dreaming up ways to spend the savings that will result. 
How can reality stray so far from what seems to be obvious logic? Let’s illustrate the conundrum by way of a thought experiment — the hypothetical costs involved in a hypothetical Disease X: 
COMMON SENSE: Suppose one out of 10,000 people will contract a potentially fatal Disease X, which — if not caught early — costs $100,000 to treat. Catching the illness early requires a $5 test, and the early treatment costs $20,000. So, if we test and treat the one sick patient, we enjoy $100,000 minus $5 minus $20,000 (equals) $79,995 in savings. So, common sense might suggest that prevention saves money. 
WIDESPREAD TESTING: But the first problem is that we don’t know in advance who needs an early screening. So, practically speaking, we have to conduct widespread testing. Testing all 10,000 people means $50,000 in tests to find the one unfortunate who has Disease X. Now, early detection saves $100,000, but we spend $50,000 for tests and $20,000 for treating the one sick person. Net savings are now $30,000, rather than $79,995. Still, some savings are better than none. 
FALSE POSITIVES: But, wait — as the TV ad says — there’s more. The test isn’t perfect and incorrectly flags two healthy people as having Disease X. We treat them, too, at a cost of $40,000, but there are no gross savings from those treatments, since neither would ever have become ill with Disease X. Now, we save $100,000 by detecting the one case early on. But we spend $50,000 in tests and $60,000 in early treatments. On net, our prevention program now amounts to a $10,000 loss — rather than savings. 
IATROGENESIS: Here things get worse. One of the two false-positive patients suffers adverse consequences from the early treatment. (The technical term is “iatrogenesis.”) We spend $30,000 to reverse the damage caused by the original treatment, which we omniscient readers know was unnecessary in the first place. The prevention program now cuts out $100,000 in costs by averting one case of Disease X, but requires us to spend $50,000 for tests, $60,000 for treatments, and $30,000 for undoing the side effects of one patient’s Disease X treatment. The net loss is now $40,000. 
We can add yet another complication. Preventive care often has the effect of extending life. While that is admirable and desirable, a longer life often means surviving long enough to contract even more expensive maladies (think of cancer or Alzheimer’s) that would never have occurred over a shorter lifespan. 
And so it goes with most preventive care. Again, that doesn’t mean we shouldn’t engage in preventive care. It only means we ought to expect our collective health care expenditures to rise, not drop, as we increase our preventive efforts. ...
This is not a new concept.  We've known it for years - but hey - that never stops politicians from repeating a good talking point, right?  See also:


Tuesday, August 1, 2017

Covered California Plans to Increase 12.5% to 25% in 2018

Covered California on Tuesday announced that health insurance rates on the state’s health insurance exchange created under the Affordable Care Act will increase by an average rate of 12.5 percent for 2018 plans. 
Peter Lee, CEO of the exchange, said the increase normally would have been just under 10 percent, but for a 2.8 percent tax on health insurers that resumes next year. 
But a bigger threat — the possibility that the Trump administration kills certain Obamacare subsidies — would increase rates by another 12.4 percent, he said, though Covered California has a work-around plan to avoid that scenario. ...  
Anthem Blue Cross of California will leave markets that comprise about half of its enrollment — except for Santa Clara County, the Central Valley and certain Northern California counties. 
That means 153,00 of those enrolled in Anthem plans through the exchange today will need to select a new plan for 2018. ... 
Anyone who earns between 139 percent and 250 percent of the poverty threshold — between $34,200 and $61,500 for a family of four — [has also been] eligible for additional reductions, which lower out-of-pocket costs such as co-pays and deductibles.
About 7 million Americans, including roughly 650,000 Californians, receive those extra subsidies. And the federal government reimburses insurers on the exchanges about $7 billion to reduce the cost of the co-pays and deductibles for those low-income people.
[The end of those] subsidies would send many premiums soaring because health insurers would have to pick up those costs themselves, and many companies would also likely flee the markets, experts say.
Covered California continues to seek clarification from the Trump administration about its intentions regarding the cost-sharing payments. But Lee said if the exchange doesn’t receive confirmation by the end of the month that the payments will continue, an additional average 12.4 percent surcharge will be attached to plans when enrollment opens Nov. 1.
The above article from the Mercury News did an adequate job in summarizing the rate increases and exit of Anthem, however, it did not explain the illegal cost reduction subsidies that have been forbidden in federal court.  In an attempt to not rock the boat too much (believe it or not), the Trump administration has been continuing these payments but that practice is not likely to continue.  Michael Cannon at the CATO Institute explains:
Another [issue] is the illegal “cost-sharing” subsidies President Obama began issuing – and that President Trump is still issuing – to insurers participating in ObamaCare’s Exchanges. In a case where the House of Representatives challenged the payments, a federal judge ruled that issuing those payments “violates the Constitution” and ordered them to stop, pending appeal. The Obama administration was pursuing an appeal, but the Trump administration has not indicated whether it would continue to appeal that ruling or enforce the judge’s order. Trump must do one or the other.
Two of President Trump’s cabinet picks have practically forced his hand on this issue.
When the federal district-court judge issued her ruling striking down the cost-sharing subsidy payments, Health and Human Services Secretary Tom Price was a Republican member of Congress. He issued a statement endorsing the ruling:
Today, Congressman Tom Price, M.D. issued the following statement after a federal judge ruled in favor of House Republicans’ lawsuit against Obamacare, saying that the Administration does not have the power to spend money on “cost sharing reduction payments” to insurers without an appropriation from Congress: 
“The ruling proves a momentous victory for the rule of law and against the Obama Administration’s overreach of Constitutional authority,” said Congressman Tom Price, M.D. “This historic decision defies the Obama’s Administration’s ask that the courts disregard the letter of the law and reasserts Congress’s power of the purse as defined by our nation’s founders in Article One of the Constitution.” 
“In recent weeks, we’ve seen insurers announce that they will exit the exchange markets in 2017, further deteriorating patients’ access and choice to health care plans that they want. This is yet again proof that Obamacare is on an unsustainable path, and House Republicans must remain committed to repealing and replacing this law. As a member of the Health Care Task Force, I’m honored to be working with my colleagues to advance positive, patient-centered solutions to the challenges in our health care system."
Price has made clear his view that Congress did not appropriate funding for these payments, and that continuing to make them would constitute executive overreach and violate the rule of law. If President Trump chooses to appeal the lower-court ruling, he would put Price in a situation where he would have to help implement a policy that he considers unconstitutional. Price arguably would have to resign.
Yesterday, Trump’s attorney general Jeff Sessions expressed his view that the payments are unconstitutional and that the lawsuit challenging those payments “has validity to it.” If Trump chooses to appeal the lower-court ruling, Sessions would be the guy who carries out that appeal. It would be…awkward for him to defend a policy he believes to be unconstitutional. 

Monday, July 31, 2017

Today in Government Healthcare: Obamacare Price Fixing Scheme Backfires; ER Room Use Not Reduced Under O'Care; Medicare Going Bankrupt & Carriers Run from Exchanges

I spent the morning getting caught on the latest industry news and am left with four telltale stories about the ineptitude of government healthcare:

1. Fewer and fewer insurers are even applying to offer Obamacare Exchange plans each yearIt was down 19% last year and another 38% this year.  Even an 'Obamacare Lawyer' can follow that math.  So, any bets on whether it will be down 57% next year or 76%?

2. The federal government's attempt to fix prices in Obamacare backfired as a University of Chicago study reveals that the Medical Loss Ratio Rules (MLR) have had no impact on premiums at all.  In fact, in some cases things were probably made worse as insurers make more money if they spend more on medical claims. Thus it benefits insurers to spend more on claims and ameliorates their incentive to engage in claim cost control or fraud prevention. Lastly, prior to Obamacare insurers were less afraid to be more aggressive with pricing in some years because they knew if they made a mistake they could raise rates the following year.  Under the new rules they are far more constrained from doing so.

3. According to an independent analysis from the Society of Actuaries, the Medicare trust fund is projected to be depleted by 2029.  The paper goes on to state:
  • Total Medicare spending will continue to grow faster than the economy, increasing the pressure on beneficiary household budgets and the federal budget and threatening the program’s sustainability.
  • Changes are needed to improve Medicare’s long-term solvency and sustainability. The longer corrective measures are delayed, the worse the financial challenges will become and the greater the burden that might be imposed on beneficiaries and taxpayers.
But how many politicians will tell you that?  Don't touch my Medicare!  Good luck with that.

4. No, Obamacare's passage and Medicaid expansion did not reduce emergency room visits - even when specifically studied in a state that expanded Medicaid.  As Politifact concluded, "there’s strong evidence that emergency room usage hasn’t declined much, if at all, since the [ACA] largely took effect in 2013. There’s also evidence that it has increased."

This was not that hard to foresee, by any means.  In true life or death situations people will go to the emergency room.  That dataset will not change much pre or post ACA.  However, for those inconvenient, nagging injuries or illnesses that sit on the borderline, one stays away from the emergency room when they are uninsured and concerned at a massive resulting bill.  However, once that person is shielded from the cost of that decision by Medicaid or an Exchange Plan, the calculus changes.  This phenomenon is only exacerbated by Exchange Plans and Medicaid's notoriously low reimbursement rates reducing the number of doctors willing to see patients.  Eventually (or maybe even as a first option, as the case may be) the ER room becomes the go-to for fast and convenient care.

Second Circuit Lowers Causation Standard for Employees Alleging FMLA Violations

This is from BakerHostetler LLP:
Last week, the Second Circuit joined the Third Circuit in lowering the causation standard in evaluating alleged Family and Medical Leave Act (FMLA) violations against employers. Under a lower “motivating factor” standard established in Cassandra Woods v. START Treatment & Recovery Centers, courts within the Second Circuit must consider whether the exercise of an employee’s rights under the FMLA was one “motivating factor” in the decision to fire the employee. Previously, the Second Circuit had adopted a higher “but for” standard, which considers whether the employer wouldn’t have fired the employee “but for” the employee exercising his/her FMLA rights, which considers whether the employer wouldn’t have fired the employee “but for” the employee exercising his/her FMLA rights. ...
In terms of the causation standard, Woods, and the U.S. Department of Labor (DOL) as amicus, urged the appeals court to give deference to the DOL regulation at 29 C.F.R. § 825.220(c), which states that “employers cannot use the taking of FMLA leave as a negative factor in employment decisions,” which they argued compels a “motivating factor” and not a “but for” causation standard. The appellate court found the DOL’s interpretation to be a reasonable one, vacated the jury verdict and remanded the case back to the lower court so that Woods can get a new trial, at which the jury can weigh the evidence under the lower standard.
Impact of This Decision
As a result of this decision, it is now easier for employees within the Second Circuit (specifically, in New York, Connecticut and Vermont) to prevail on claims alleging FMLA violations by their employers if they can demonstrate that their exercise of their FMLA rights was only one reason why their employers took the adverse employment actions against them. Therefore, employers should consult with experienced counsel prior to taking any adverse employment action against an employee who has exercised his or her FMLA rights, even if other reasons may exist for the adverse employment action.

Friday, July 28, 2017

On Average, Employers Pay 79% of Employee Medical Insurance Cost and 67% of Family Insurance Cost

Sixty-seven percent of private industry workers had access to employer-provided medical care benefits in March 2017. Having access means employers offered the benefit, regardless of whether employees chose to participate. Forty-nine percent of private industry workers participated in an employer-provided medical care plan in March 2017. That results in a take-up rate—the percentage of workers with access to a plan who participate in the plan—of 72 percent. ...

One reason workers may choose not to participate in the medical care benefits available from their employers is cost. On average, private industry employers paid 79 percent of the costs for medical plan premiums for single coverage and 67 percent for family coverage. For workers in management, business, and financial occupations, employers paid 79 percent of the premium costs for single coverage and 70 percent for family coverage. For workers in service occupations, employers paid 77 percent of the premium costs for single coverage and 62 percent for family coverage.

Source: The Bureau of Labor Statistics.

Repeal and Replace Likely Dead - They'll Move to Assess and Amend Now; My Visit with Armstrong & Getty

Obamacare is still in place, but as usual, we'll be following any regulatory, legislative or political changes that impact large employers.
  • July 25: The Senate voted 51-50 on a procedural vote to open up debate on the next steps for  possible ACA repeal and replace measures.  VP Pence provided the tie breaker.  
  • July 26: The Senate voted on the repeal only Obamacare Repeal Reconciliation Act (ORRA), which failed 45-55 with 7 Republicans voting against (Alexander-TN, Capito-WV, Collins-ME, Heller-NV, McCain-AZ, Murkowski-AK, and Portman-OH).
  • July 27 2:00 pm -The Senate voted in the afternoon on a single payer bill which failed 0-57  (see our article below).
  • July 27 6:00 pm - Four Senators, McCain, Graham, Cassidy and Johnson, hold a press conference to request the  Speaker of the House  give assurances that  a passed “skinny bill”  would be allowed to be the vehicle to go to conference for further deliberations. 
  • July 28 1:00 am - With a vote of 49-51, the “skinny bill” fails.  McCain, Murkowski and Collins vote NO. “We can’t make the same mistake we made in 2009,” McCain said.  “We’ve got to have Republicans and Democrats together.” Speaker McConnell expresses his disappointment as efforts to repeal the ACA collapse.
  • July 28 2:25 am – President Trump tweets “3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let Obamacare implode, then deal. Watch!”
I was on Armstrong and Getty this morning discussing last night's vote.

We’ll continue to update you on pertinent developments.  Here is an overview from the media -

5 Ways White House Can Use Its Muscle To Undercut Obamacare
July 28, 2017 - California Healthline
Excerpt: "Obamacare faces a difficult political reality: Its marketplaces require active maintenance and federal support.  The White House can take a number of behind-the-scenes steps to sabotage the exchanges and hasten their undoing. It has been deploying some of those tactics for weeks now — even prompting a review from the Government Accountability Office to see if these actions are legal. Meanwhile, in a statement issued after Friday’s early-morning vote, Health and Human Services Secretary Tom Price reiterated the administration’s commitment to 'provide relief to Americans who are reeling from the status quo.'"
Senate Rejects Slimmed-Down Obamacare Repeal as McCain Votes No
July 27, 2017 – NY Times
Excerpt: “Unlike previous setbacks, Friday morning’s health care defeat had the ring of finality. After the result was announced, the Senate quickly moved on to routine business. Mr. McConnell canceled a session scheduled for Friday and announced that the Senate would take up the nomination of a federal circuit judge on Monday afternoon.”
Senate rejects measure to partly repeal Affordable Care Act, dealing GOP leaders a major setback
July 27, 2017 – Washington Post
Excerpt: “Their latest effort to redraw the ACA failed after Sen. John McCain’s decision to side with two other Republicans against President Trump and GOP leaders. The Arizona Republican, diagnosed with brain cancer last week, returned to Washington on Tuesday and delivered a stirring address calling for a bipartisan approach to overhauling the ACA, while criticizing the process that produced the current legislation.”
Obamacare Repeal Collapses as Senate GOP Blocks Health Bill
July 27, 2017 – Bloomberg
Excerpt: “It wasn’t immediately clear what the next steps would be for the Republicans. The repeal effort had appeared to collapse several times before, only to be revived. And several Republicans pleaded for their colleagues not to give up, even as President Donald Trump blasted the vote.”
GOP single-payer amendment fails in Senate
July 27, 2017 – The Hill
Excerpt: “Senators voted 0-57 on the amendment from GOP Sen. Steve Daines (R-Mont.) to implement a government-funded healthcare system…But the amendment, part of a days-long debate on repealing and replacing ObamaCare, was widely expected to fail, with Democrats accusing GOP senators of putting up a "sham" proposal…The legislation from Daines uses the same language as a Medicare-for-all bill in the House sponsored by Rep. John Conyers Jr. (D-Mich.).”

Wednesday, July 26, 2017

Senate Votes to Take up Obamacare Repeal House Bill for Debate

On July 25, 2017, members of the U.S. Senate voted 51-50 to open up the American Health Care Act (AHCA) for debate. Vice President Pence cast the deciding vote on this "Motion to Proceed". The AHCA is the bill to repeal and replace the Affordable Care Act (ACA) that passed in the House of Representatives on May 4, 2017. 

As a result of the vote, the Senate will now begin debate on the AHCA - a series of proposed amendments will undoubtedly be part of this process. One such amendment already failed yesterday evening with nine Republicans joining all Democrats in opposing the amendment.

See our legislative alert for an overview.

The Motion to Proceed is, in essence, just a vote to have a vote. There appear to be four possible outcomes:

1. The Senate passes the AHCA in the same form as passed by the House. In that case, the bill would go to the President for signature. This outcome seems unlikely at this point.

2. The Senate passes its own bill, either some form of the Better Care Reconciliation Act of 2017 (BCRA) or something entirely different. There have been recent talks of the Senate possibly passing a "skinny bill" which would only repeal the ACA employer mandate, the individual mandate and the medical device tax. If the Senate passes the BCRA or another bill, then that bill could go to the House. If the House passes the Senate bill in the same form as passed by the Senate then the bill would go to the President for signature.

3. The Senate passes a form of the BCRA or something entirely different. The House and Senate decide to send the AHCA and the Senate bill to a joint House/Senate conference committee where they would attempt to resolve any differences between the two bills. If they are successful, then the revised conference committee bill would need to go back to both the House and Senate for a vote before it could be signed by President Trump.

4. The Senate is unsuccessful in passing any type of bill. In that case, it would appear that any repeal of the ACA would, at the very least, be delayed. Remember, however, that "repeal and replace" has been pronounced dead on several prior occasions.

Before Your Hospital Hired This Staffing Firm, 6% of Patient Visits in the Emergency Room Were Billed at the Most Expensive Level of Care - Afterwards it's 28%

From the New York Times:
Early last year, executives at a small hospital an hour north of Spokane, Wash., started using a company called EmCare to staff and run their emergency room. The hospital had been struggling to find doctors to work in its E.R., and turning to EmCare was something hundreds of other hospitals across the country had done. 
That’s when the trouble began. 
Before EmCare, about 6 percent of patient visits in the hospital’s emergency room were billed for the most complex, expensive level of care. After EmCare arrived, nearly 28 percent got the highest-level billing code. ... 
Sometimes, insurers simply pay higher out-of-network bills, but the cost is often passed on directly to patients. ... 
Nationwide, more than one in five visits to an in-network emergency room results in an out-of-network doctor’s bill, previous studies found. But the new Yale research, released by the National Bureau of Economic Research, found those bills aren’t randomly sprinkled throughout the nation’s hospitals. They come mostly from a select group of E.R. doctors at particular hospitals. At about 15 percent of the hospitals, out-of-network rates were over 80 percent, the study found. Many of the emergency rooms in that fraction of hospitals were run by EmCare.
The researchers focused on 16 hospitals that EmCare entered between 2011 and 2015. In eight of those hospitals, out-of-network billing rose quickly and precipitously. (In the others, the out-of-network rate was already above 97 percent, and it did not go down.) They also looked at a larger sample of 194 hospitals where EmCare worked and found an average out-of-network billing rate of 62 percent, far higher than the national average. ...
Hospital emergency departments, which must take all comers regardless of their health insurance, were once viewed as financial drains. Then hospital leaders started to see the E.R. as the front door, critical to attracting paying patients. In the early 1990s, emergency departments accounted for a third of admissions to hospitals; today, they account for half, according to a RAND study. ...
In addition to its work in emergency rooms, EmCare has been buying up groups of anesthesiologists and radiologists. In these hospital specialties, it is hard for patients to shop, and out-of-network billing is common.
The good news in California and in a few other states is that this issue has been addressed, as the NYT article states, "California recently passed a law setting a maximum amount that out-of-network doctors can charge patients. Other states, including Florida and New York, have also passed laws to limit surprise bills."

Under that new California's new law which became effective on July 1, 2017, if you visit an in-network facility - such as a hospital, lab or imaging center - you will be responsible solely for your in-network share of the cost, even if you're seen by an out-of-network provider. You can read more about that law here.

Also note that the new California law only addressed non-emergency situations. That is because, by case law, California outlawed balance billing in emergency departments back in 2009, see the 2009, unanimous decision of Prospect Medical Group, Inc. v. Northridge Emergency Medical Group.

There the California Supreme Court declared "balance billing unlawful in the context of emergency medical care. Where a health plan ... does not pay, in whole or in part, the amount charged by emergency room doctors, the doctors now must resolve billing disputes solely with the health plans. The providers may seek dispute resolution, or even sue the health plans if they wish, but they may no longer bill patients with a health plan for the disputed amount." 

Tuesday, July 25, 2017

Government Efficiency: The U.S. spends $100 billion on this program, so Medicaid recipients can save $5.5 billion

From Megan McArdle writing at Bloomberg:
... When Obamacare was passing, its supporters were pretty clear about what the program was supposed to do: save thousands of lives every year, reduce health-care costs, lower premiums, and save thousands of families from the trauma, and stigma, of bankruptcy. 
Have mortality rates dropped? No, they rose. Are premiums lower? No. Have bankruptcies dropped? Yes, but only dubiously related to Obamacare. The only outcome for which we have really strong evidence is a modest reduction in the financial stress of illness. According to the CFPB [Consumer Financial Protection Bureau], we have reduced medical debt by about $5.5 billion, or roughly $10 per consumer. 
Now, that debt is not equally distributed, so some people got a substantial benefit and are breathing easier without having to worry about their medical bills. That’s a definite good, and we should all be glad to know that fewer people are waking up in the middle of the night, wondering where they’re going to be able to pay for their medical care. 
But we’re spending more than $100 billion a year on Obamacare. That is a lousy way to save people $5.5 billion in medical debt. It will be troubling if we continue to find good evidence of small effects like these, and less compelling evidence of the substantial benefits we were promised in return for all that money. 

Monday, July 24, 2017

ADA Guidance For Employers - 12 Month Leave Request Unreasonable, Even 2 Months May Be Unreasonable

... For example, the 1st Circuit cited a case in which a court ruled that an employee’s request for an extension of medical leave of 4 to 6 months was unreasonable. In another decision, the 7th Circuit suggested that even a 2-month medical leave may not be required by the ADA because the “inability to work for a multimonth period removes a person from the class protected by the ADA.” 
The 1st Circuit cited its “newest judicial superior,” U.S. Supreme Court Justice Neil Gorsuch, in a 10th Circuit opinion. In the case, Gorsuch captured the dilemma lengthy leave requests pose for employers:
By her own admission, [the employee] couldn’t work at any point or in any manner for a period spanning more than six months. It perhaps goes without saying that an employee who isn’t capable of working for so long isn’t an employee capable of performing a job’s essential functions—and that requiring an employer to keep a job open for so long doesn’t qualify as a reasonable accommodation. After all, reasonable accommodations—typically things like adding ramps and allowing more flexible working hours—are all about enabling employees to work, not to not work. 
. . . It’s difficult to conceive how an employee’s absence for six months—an absence in which she could not work from home, part-time, or in any way in any place—could be consistent with discharging the essential functions of most any job in the national economy today. Even if it were, it is difficult to conceive when requiring so much latitude from an employer might qualify as a reasonable accommodation.
The 1st Circuit agreed that complying with a request for a lengthy period of leave imposes obvious burdens on an employer, not the least of which is somehow covering the employee’s job responsibilities during her extended leave. In this case, Pam did not show that her requested accommodation was facially practicable, and therefore, dismissal of her failure-to-accommodate claim was appropriate. 
Significantly, the 1st Circuit decided that because Pam failed to shoulder her burden of identifying a reasonable accommodation, there was no need to consider whether a 12-month extension would have imposed an undue hardship on AstraZeneca. 
Some Relief for Employers 
The takeaway from this case is that an employer may not be required to grant an employee’s request for an extended, multimonth medical leave of absence under the ADA, particularly if there is evidence that the employee will not be medically able to return to work in the near future. 
Although there is not a black-and-white line, employees’ requests for extensions of leave of more than 4 months have been found to be unreasonable and may be denied based on case law. Each request for leave under the ADA must be analyzed based on the individual facts. In complex cases, the analysis ideally will include employment counsel. 
Also, it is important to remember that employees may be entitled to medical leave under other federal and state laws, including the federal Family and Medical Leave Act (FMLA).

Thursday, July 13, 2017

Senate Healthcare Revision: More Taxes & Government with a Couple of 'Get Out of Jail Free' Cards

Each of these revisions to revamp and revitalize most of Obamacare grow government more than the last while further curtailing individual freedom.

The Senate released its latest attempt to tweak Obamacare this morning.  It is 172 pages. Compared to the last Senate version, it is a mishmash of poor and decent policy mixed in with a few 'Cornhusker Kickback' styled giveaways designed to lure in some straggler Republicans.  You can view a side-by-side comparison of the two bills here.

It could forestall America's slide to single-payer healthcare for a couple of more years and prolong our partially-socialized hybrid provided politicians could stick to the reduced growth in Medicaid.  But, like the supposed 'Doc Fix' legislation that limped along for more than a decade, I strongly suspect politicians will fold years into the future when the politics of shrinking a government handout becomes difficult to sell to clamoring constituents.  Few politicians are actually known for their robust spinefullness.

As Senator Rand Paul has accurately put it, "too many Republicans are falling all over themselves to stuff hundreds of billions of taxpayers’ dollars into a bill that doesn’t repeal Obamacare and feeds Big Insurance a huge bailout."

Here are the changes to the Senate bill to appease the GOP's more liberal majority:
  • $45 billion more in federal giveaways to help treat the opioid addiction problem in America; 
  • An extension and reaffirmation of three more Obamacare taxes.  Recall that all earlier versions of this legislation kept the 'Cadillac Tax.'  Now under pressure from the left, the GOP has fully reneged on its pledge to repeal every ACA tax by adding three more politically sellable ones back in - 
    • a .9% surtax on Medicaid for individuals making more than $200,000 per year ($250K for couples); 
    • and an additional tax on insurance executive's compensation.
  • $70 billion more to states to temporarily Band-Aid the excessive cost of healthcare and try and blunt some of the adverse selection created by allowing the unhealthy to wait until they are sick before buying healthcare. This now brings this fund total up to $182 billion. This is the additional "bailout" feeding "Big Insurance" against which Senator Paul rails.  
These taxes, like any tax increases, suppress economic growth and opportunity throughout the economy.  Right now, Obamacare costs our economy about 250,000 jobs.

Here are the changes to the Senate bill designed to buy the vote of more conservative members:
  • Health Savings Accounts can be used to pay for health insurance premiums allowing more people to pay for healthcare with pre-tax dollars the same way businesses do.
  • Lower cost, slimmed down health insurance options could be offered and people could be eligible for tax credits to help pay for them so long as the carrier also offers a full, high-dollar, Obamacare plan as well. 
  • While the cuts to Medicaid will remain in place from the Senate's last version of this bill, new exceptions were created to funnel more taxpayer money from the federal government to the states in cases of a "public health crisis" whereby the declaration of a state of emergency would garner more funds. 
Would this bet better than Obamacare?  Yes in that it does eliminate the individual mandate, employer mandate and most of the taxes passed into law with the ACA.  However, it further cements Big Government's marriage to Big Insurance in America and will ultimately lead to increased premiums and fewer choices for the American people. This is not a solution but a temporary Band-Aid on a terminally ill system.  

Later in the day I visited The Michael Berry Show to discuss this proposal:

Monday, July 3, 2017

ERISA Compliance FAQs: Reporting and Disclosure Rules


When Dieting or Learning New Skills, 3-Weeks Does Not 'Cement' a Habit

From Forbes
...[S]everal weeks or even several months isn't long enough to really learn new behaviors, the piano, French, tennis, or how to communicate with your significant other. There just isn't enough time to test your skills. The question is can you maintain new behaviors over longer stretches that include bumps on the road such as holidays, changes in your job, relationship difficulties, illness, different seasons, or the death of Glenn in The Walking Dead television series. The question is when you stumble off the path...which will happen...will you and how quickly can you get back on to the path? 

Sunday, July 2, 2017

July 1 Law Change: California Now Offers Consumer Protections Against 'Balance Billing' Surprises on Fully-Insured Plans

From Kaiser Health News via Healthcare Finance:
California is among 21 states with consumer protections against balance billing, says Betsy Imholz, director of special projects for Consumers Union. But many states' protections are "quite limited," she says. 
"In some states, they only apply in emergency situations or for certain types of plans" such as HMOs, says Claire McAndrew, director of campaign strategy for Families USA, a national consumer advocacy group.
However, in a handful of states, including New York, Florida and now California, the laws are strong and comprehensive, McAndrew says. 
Under California's new law, if you visit an in-network facility -- such as a hospital, lab or imaging center -- you will be responsible only for your in-network share of the cost, even if you're seen by an out-of-network provider. 
The law applies to non-emergency services received on or after July 1. 
"This is a very big deal," says Tam Ma, legal and policy director for the advocacy group Health Access California. "We've heard from hundreds of consumers who were getting these surprise bills." 
A 2015 Consumers Union survey found that nearly 1 in 4 Californians who visited a hospital or had surgery in the previous two years were charged an out‐of‐network rate when they thought a provider was in‐network. 

Saturday, July 1, 2017

The Spurious “People Will Die” Claim Rests on Fallacious Reasoning

From Charles Blahous at Economics 21, the entire post is absolutely worth a read:
The claims are based on extolling a single effect of the ACA: increasing health insurance coverage, which is said to reduce mortality. Of course, the ACA didn’t magically produce its coverage increase out of thin air. To finance it, the law included several features that likely have countervailing effects on mortality. Below is a partial list of such effects, provided with the caveat that it would be just as silly to charge the ACA with killing people as it is to attribute deaths to its possible repeal:
  • The ACA imposed substantial taxes on medical devices and drugs, inhibiting their development and use. We do not know how many lives these products would otherwise have saved.
  • Most of the ACA’s coverage expansion occurred through Medicaid, which has a limited supply of providers and services. Those who gained Medicaid coverage via the ACA gained access to subsidized health services. But unless the number of providers, facilities and services accessible through Medicaid grew at least as fast as enrollment did, there has been a corresponding reduction in health service availability to people previously on Medicaid.
Full story.

And for a Saturday morning chuckle from Remy, enjoy, "PEOPLE WILL DIE!"


On Armstrong & Getty 6/28/17 as We "Sail the Churning Seas of Benefits" & U.S. Healthcare

We start at about the 11 minute mark below.

7 AM - 1 - Joe's trying to de-clutter. 2 - Craig Gottwals talks Trumpcare latest with us. 3 - The News with Marshall Phillips. 4 - John McEnroe said Serena would be #700 among men players.

In this segment, Jack and Joe really wanted to focus on what this means for the average patient.  The following story came out just after our our interview and I think is  a great addition to the discussion - this is the direction we would be headed under a more socialized system.
  • A new study released Thursday by the Fraser Institute estimates that 63,459 Canadians left the country for medical care last year. That's up about 40% from 2015.
  • According to Fraser Institute's yearly measurement of wait times, people waited an average of 10.6 weeks to see a specialist for treatment, which is four weeks longer than what physicians deemed reasonable.
Full story from the Ottawa Sun here.  

Friday, June 23, 2017

Comparing the Major Provisions of PPACA to the House and Senate Replacement Proposals with Audio from Armstrong & Getty

Overarching Thoughts

1) The Senate absolutely did not “start over” but simply made a few tweaks to the Obamacare Lite bill passed by the House. I’d call this Senate version Obamacare Lite Plus.

2) If you didn’t think the House bill went far enough to repeal Obamacare, you will really hate the Senate bill because, on the whole, it backtracks a few steps toward Obamacare.

3) If I were evaluating these bills based upon how they addressed the problems we faced in healthcare in 2010, I’d grade Obamacare an F, House Bill a D- and Senate Bill an F+.

4) If evaluating these bills today, knowing Obamacare is the law of the land I’d grade the House bill as a C+ and the Senate bill as a C.

  • Both the House and Senate bill repeal all but one Obamacare tax. 
  • Both the House and Senate bill eliminate the Individual and Employer mandates. 
  • Both bills allow for larger use of HSAs and FSAs. 
  • Both bills permit the states a bit more freedom in dealing with many of Obamacare’s coverage mandates. 
  • Both bills phase out the Medicaid expansion ushered in by Obamacare. The House bill does it sooner but the Senate bill does it in greater degree in the long run assuming politicians could stick to benefit reductions – but we know they cannot. 
  • All three plans cement a redistribution of wealth and new federal entitlement of $1.5 to $1.75 trillion dollars. 
  • None of the three laws significantly work to reduce the cost of healthcare in America in a meaningful enough way to avert future economic turmoil. 
  • The House or Senate bill probably prolong our slide into socialized medicine but only by a couple of years. At this pace the U.S. will end up in some form of rationed and socialized healthcare in 7 to 10 years.
I spent a few minutes on the Armstrong & Getty Show this morning discussing this:

House Bill
Senate Bill
10 Year Cost
$1.75 T
$1.63 T
$1.43 T

Uninsured After 10 Years
28 million people
51 million people (note that CMS scored it at 41 million)

50 million people
26 Year olds
Can stay on parents’ insurance irrespective of college enrollment or dependent status.

Taxpayer dollars to buy insurance
Individuals making less than 400% of FPL get money. This is about $100K of income for a family of 4. Not required to pay more than 9.5% of income for health ins.
Abandoned income based subsidies and allowed refundable tax credits based on age bands. Credits did phase out for higher income levels.

Hybrid approach for incomes up to 350% of FPL (about $86K for family of 4). Adults 59-64 could pay up to 16.2% of income. See Marginal Revolution for a good discussion on the issues around income-based subsidies.

Amount of taxpayer dollars to buy insurance

Subsidy amounts based on an ins. plan designed to cover 70% of medical expenses. 

Bases subsidy amounts on age as opposed to income or plan cost. Would be least dollars redistributed of the three plans. 

Subsidy amounts based on a plan that is designed to cover 58% of medical expenses.
Preexisting Conditions
Coverage cannot be denied or cost more.
States can get permission to let insurers charge more for some preexisting conditions. States would have access to federal money to help those with expensive policies or conditions.
Insurance companies would be required to accept all applicants regardless of health status and charge them the same premium just like in O’care. But the draft bill would let states ask permission to reduce some required coverages.

Tax Burden
Implemented 21 new taxes on business, individuals, and various industries. 
Eliminates 20 of the 21 new taxes, delays Cadillac Tax from 2020 to 2026
Eliminates 20 of the 21 new taxes, delays Cadillac Tax from 2020 to 2026

Obamacare expanded Medicaid from persons at 100% FPL to 138% FPL and promised the federal government will pay 90% of that expansion. 31 states took that deal. 
Would limit Medicaid reimbursement by a per-enrollee cost, based on 2016 average costs. And phase out the expansion in 2020. 
Allows the 31 states that expanded Medicaid to continue getting federal funding through 2023, with reduced funding starting in 2021. The bill sharply curtails federal support for Medicaid expansion in 2024, likely causing many states to end the expansion. Deeper proposed cuts could begin in 2025. 

Subsidies for Out of Pocket Costs
Provides subsidies to help people with lower incomes pay for out-of-pocket costs like deductibles and co-payments. Note, these subsidies are in legal doubt now under PPACA.

Eliminates these subsidies immediately. 
Preserves the subsidies through 2019, then eliminates them altogether. 
Prohibitions on annual
and lifetime limits
Bars insurers from setting a limit on how much they have to pay to cover someone.
Preserves this rule, but gives states the option to eliminate it as part of a waiver of insurance market rules.

Preserves this rule, but gives states the option to eliminate it as part of a waiver of insurance market rules.
Underwriting Premiums for Older vs. Younger Americans
Bans insurers selling policies directly to individuals from charging their oldest customers more than three times what they charge their youngest ones thereby unfairly burdening the young with higher premiums. 

Allows insurers to charge older customers the actuarially sound amount of five times as much as younger ones.
Allows insurers to charge older customers the actuarially sound amount of five times as much as younger ones.
Individual Mandate
Requires all Americans to buy health insurance or pay a tax penalty, with exceptions for 30+ categories of ‘hardship’

Eliminates the penalties. Instead, when people who've gone uninsured decide to buy health insurance, they'll have to pay a 30% surcharge on their premiums for one year.

Eliminates the penalties. Currently no provision to dissuade people from gaming the system. This must be corrected
Employer Mandate
Requires companies with 50 or more employees to offer government approved, affordable health insurance to persons working 30 or more hours per week. 

Eliminates all employer mandate penalties.
Eliminates all employer mandate penalties.
Health Savings Accounts
In 2017, allows an individual to put $3,400 and a family to put $6,750 into a tax-free health savings account.

Nearly doubles these limits to $6,650 for individuals and $13,300 for families.
Nearly doubles these limits to $6,650 for individuals and $13,300 for families.
Flexible Spending Accounts
Prevents Americans from using these pre-tax accounts for over-the-counter medications without also obtaining a prescription.  Caps overall use of an FSA to $2,500 per person per year. 

Allows over-the-counter use of FSAs without first obtaining a prescription. Removes annual cap on the amount of money a person may put in an FSA. 
Allow States to Impose Work Requirements for Able Bodied Persons Seeking Medicaid
PPACA did not allow for this. 
Gives states the option of requiring some Medicaid recipients to work or pursue job training.

Gives states the option of requiring some Medicaid recipients to work or pursue job training.