2014 and Beyond

2014 and Beyond

Reacting to PPACA’s Volatile evolution

Presented By:

Adam V. Russo, Esq.

CEO

Ron E. Peck, Esq.

Sr. Vice President & General Counsel

Chris Aguiar

Legal Administrator

September 25, 2013

©The Phia Group, LLC – Copyright 1999-2013

Not Even The Crystal Ball Could’ve Seen This!

Play or Pay … Eventually!

The Feds on the Offensive

The Hottest Issues in Reform

Fiduciary Duty – Time to Keep the Buck?

Overview


Massachusetts Foreshadowing … Realities of “Romney-Care”

Certainty of Coverage Leads to Quandary of Care & Cost

Focus on Universal Coverage - Access Over Cost

Access to Coverage, Not Care

Heavy Coverage Mandates

Increased Risk – Increased Premiums – MA led the nation in 2010

premiums spent – over $400 per person per month (DOUBLE the

national average!)

Carriers file application with state to raise premiums and are denied

Not even the crystal ball

could’ve seen this!



Certainty of Coverage Leads to Quandary of Care & Cost

Carriers file lawsuit

Government investigates and discovers

Excessive charges

Wasteful tactics

Price fluctuations at facilities and between facilities

August 2012: Massachusetts passes new cost containment bill





Growth of Self-funding in MA

Increase in the percentage of workers in self-insured plans

among all firm-size cohorts, except among workers in firms

with fewer than 50 employees.

Since passage of MA health care reform % of workers in firms

with 50 or more employees in self-insured plan increased from

54.4 % in 2005/ 2006 to 67.2 % in 2010/ 2011




“ObamaCare” – The Unforeseen

– Play or Pay … Eventually

• Employer Mandate delayed until 2015 ... maybe later?

• Extra year to simplify burdensome reporting requirements

– Effects

• Delay will cost $11 Billion Dollars

(http://www.rand.org/pubs/research_reports/RR411.html)

• Attractive option to let employees go to the exchange?

• Roughly 1 million fewer people than projected will be

enrolling in employer-based coverage.

(http://www.huffingtonpost.com/2013/07/30/employer-

mandate-delay_n_3678049.html)




http://www.rand.org/pubs/research_reports/RR411.html

http://www.huffingtonpost.com/2013/07/30/employer-mandate-delay_n_3678049.html





Individual Mandate Presses on ... Skinny Plans?

Coverage for preventive services and a limited number of

doctor’s office visits, but no hospital stays or surgeries.

Loophole in PPACA – Government concedes legality, but

for how long?

Play or Pay … Eventually!


The Fed’s Problem? – Adverse Selection!

Self-Funding – A Thorn in the Fed’s Side

Young Healthy Lives Being Kept On the Plan –

WELLNESS INCENTIVES!

Old, Sick Lives to the Exchanges

Less Premiums – Higher Risk – Lack of Funding

Their Solution?

The Feds on the offensive


The NAIC & States Leading the Charge: Back Door Regulation

on Self-Funding

Play or Pay Delay – “Altruism or Conspiracy?”

ERISA - The Next Shoe to Fall?

61% of covered workers are in a self insured plan, up from 49%

in 2000*

2012 Urban Institute Study: 60% of small firms will convert

without regulation*

Original ObamaCare bill had ERISA oversight provisions*

White House & Liberals again trying to close the “self-

insurance” loophole*

* Steve Moore, The Attack on Self-Insurance – Liberals Want to Re-Write ERISA to Save ObamaCare,

Wall Street Journal, 9/12/2013



Switching Sides: DOL Attack on ERISA Pre-emption?

Vermont “Health Care Database” statute, 18 VSA § 1941(a)(1)

Requires self-insured plans and their TPAs to provide state with

participant eligibility and claims data

DOL filed Amicus brief supporting VT’s position in Liberty

Mutual Insurance Co. v. Donegan

DOL joining political movement against self-funding and

ERISA preemption?



Preparing for 2014 Mandates

Spousal Coverage After DOMA

Financial Implication of Fees

Essential Health Benefits – Do State Benchmarks Matter?

Impact of Non-discrimination Delay

2014 Transitional Relief

Maternity Benefits for Dependant Children

Grandfathered Plan Requirements for 2014

Annual Open Enrollment Required of All Plans

Contraceptive Coverage

Hottest Issues in REform


Preparing for 2014 Mandates

Effective 2014 – Group Health Plans May NOT

Impose pre-existing condition exclusions on any

covered individual, regardless of age

Coverage waiting periods exceeding 90 days

Annual limits on essential health benefits



Spousal Coverage After DOMA

Federal Law Has Changed – How Do You Define Spouse?

For legally married in a state that recognizes marriage

Employers must apply equal protection to same-sex &

opposites sex marriages

Private, Self-funded plans? - Do Not Have to Offer

Coverage to Same Sex Spouses

Federal law does not require coverage

State law is exempt

COBRA & FMLA Implications



Financial Implication of Fees

PCORI

Should already be collected and paid in 2013

TRF – Transitional Reinsurance Fund

Applies to both insurance & self funded

Reinsurance Contributions in effect through

December 31, 2016

Due in 1 annual payment



Essential Health Benefits – Do State Benchmarks Matter?

State benchmarks do not apply to:

Self-insured health plans

Grandfathered health plans

BUT – if Essential Health Benefits provided, cannot be

subject to limits

Benchmarks must be used to determine “minimum value”



Impact of Non-discrimination Delay

Already in effect for Self-funded but delayed for Fully

insured

Many groups seeking to keep their Fully insured plans.

Ploy to keep Plans from Self-funding?



2014 Transitional Relief

Large media mis-communication

Transitional Relief is only applicable for certain aspects

Out of Pocket Max Delay

To Ensure compliance, must ensure relief applies to the specific

component



Maternity Benefits for Dependent Children

Coverage until 26 for dependants – but not necessarily costs of

pregnancy

Roughly 70% of Plans choose not to provide maternity benefits to

dependents

Justified under the Pregnancy Discrimination Act of 1978

True even after Essential Health Benefits come into play (maternity

coverage is an Essential Health Benefit)

Stay tuned … National Women’s Law Center has filed federal

discrimination complaints against five large employers claiming

exclusion of pregnancy coverage for dependant children violates PPACA

nondiscrimination provisions



Grandfathered Plan Requirements for 2014

Total annual dollar limit phase out on Essential Health

Benefits by 2014

Dependent child coverage until age 26

No pre-existing condition limitations for dependants

under age 19

No waiting periods greater than 90 days



Annual Open Enrollment Required of All Plans?

New open enrollment period for health insurance plans

Consumers can begin enrolling in new health plans on October 1, 2013

Enrollment period to extend through March 31, 2014

Applies to both employer provided and individually purchased health

coverage



Contraceptive Coverage

DOL, HHS Issue Final Rules for Contraceptive Coverage

Religious employers exempt

No Exemption for non-religious emplo0yers who’s beliefs

would be violated

Non-profit religious hospitals do not have to pay for contraceptives

Insurance providers MUST still provide separate coverage

TPAs may be required to provide or arrange separate no-cost

contraceptive services for plan participants of exempt plan

Use EBSA Form 700



Fiduciary Duty: ASOs, & BUCAs Do It, Should You?

TPA - Administrative Services Agreement (“ASA”)

“TPA is not and shall not be deemed to be a fiduciary of Client

or any other parties. The duties of TPA under this agreement

are purely administrative and shall not be deemed to defer or

delegate any discretionary authority or control on behalf of

Client or with respect to any benefit plan of Client.”

But remember – its what’s you do, NOT what you say!

Those who act like a Fiduciary, will be deemed one

Fiduciary Duty – Keep the buck?


Express Oil Change, LLC v. ANB Insurance Services, Inc. 2013

WL 1245748 (N.D. Ala. Mar. 27, 2013).

Broker helped employer create self-funded plan

Failed to arrange for reinsurance coverage

Court held broker liable



Hi-Lex Controls v. BCBS of Michigan, 2:11-CV-12557, 2012 WL

5990230 (E.D. Mich. Nov. 30, 2012).

Discretionary Authority with the “BUCAs”

“The Plan Administrator delegates to “BUCA” the discretion to

interpret and apply plan terms and to make factual determinations

in connection with its review of claims under the plan. Such

discretionary authority is intended to include, but not limited to, the

determination of the eligibility of persons desiring to enroll in or

claim benefits under the plan, the determination of whether a

person is entitled to benefits under the plan, and the computation of

any and all benefit payments. The plan administrator also delegates

to “BUCA” the discretionary authority to perform a full and fair

review, as required by ERSA, of each claim denial which has been

appealed by the claimant or his duly authorized representative.”



Join us November 20, 2013 at 1PM For OUR Next Free Webinar…

What You Don’t Know CAN Hurt You ! – A Detailed

Review of Provisions Contained within provider

network agreements …

Adam V. Russo, Esq. Ron E. Peck, Esq. Chris Aguiar

[email protected] [email protected] [email protected]

Text “PHIA” to 22828 & Join our Mailing List!

781-535-5600 (Ph)

781-535-5656 (Fax)

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Braintree, MA 02184

www.passionforsubro.com www.russominchofflaw.com


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2014 and Beyond

Health & Medicine

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