Provider Victory in Latest No Surprises Act Litigation Overturns QPA Rules

By Alana Broe and Amanda Hayes-Kibreab - On August 24, 2023, Judge Kernodle of the Eastern District of Texas issued a fourth judgment overturning additional aspects of the No Surprises Act (NSA) rulemaking and guidance. This latest decision vacated aspects of rulemaking related to the method for calculating the Qualifying Payment Amount (QPA) and some provisions related to the processing and dispute resolution for air-ambulance claims under the NSA. In response, CMS has suspended all Independent Dispute Resolution (IDR) process operations until the Departments of Health and Human Services, Labor, and the Treasury (the Departments) can issue additional guidance. Read Full Article…

VBA Article Summary

1. Ghost Rates in QPA Determination Overturned: Judge Kernodle ruled in favor of the Plaintiffs by overturning guidance that allowed insurance plans to include "ghost rates" in their calculation of the Qualifying Payment Amount (QPA) for out-of-network services. Ghost rates are contracted rates for services that providers do not expect to provide, often set at unrealistically low amounts. The Judge held that including these rates contradicted the National Service Act (NSA) and should not be factored into QPA calculations.

2. Specialty Rates and ERISA Plan Administrator Rates Challenged and Overturned: The Plaintiffs successfully challenged the Department's guidance on specialty rates, arguing that it conflicted with the NSA's directive to calculate the QPA based on rates from providers in the same or similar specialty. Judge Kernodle agreed, leading to the overturning of this guidance. TMA also contested the discretion given to self-funded plans to choose between contracted rates recognized by third-party administrators or self-funded plan rates when calculating the QPA. The Judge ruled in favor of the Plaintiffs, stating that the NSA unambiguously requires the use of plan sponsor rates, not administrator rates.

3. Impact of Adjustments and Defense of QPA Disclosure and Air Ambulance Geographic Regions: The First Interim Final Rule (IFR) instructed health plans to exclude certain payment adjustments and retrospective payments from QPA calculations. Judge Kernodle found this directive to be in conflict with the NSA's requirement to use the "entire" payment amount, and therefore ruled in favor of the Plaintiffs. The government successfully defended two provisions: QPA Disclosure and Air Ambulance Geographic Regions. Judge Kernodle upheld the First IFR's rules regarding QPA disclosure, stating that the NSA allowed the Departments wide latitude in issuing disclosure rules. He also found that the definition of geographic regions for calculating the QPA in the context of air ambulance services was reasonable and not arbitrary or capricious.

The Eastern District of Texas order and opinion is available here.

By William H. Bestermann Jr. MD - Eliminating waste and reducing variation are key concepts in the way you run your business. Years ago, Japanese car makers almost destroyed the American auto industry by doing a much better job with these concepts. Now you are much better at reducing waste and variation and you are much more competitive. Six sigma is a very high bar. It is only 3.4 defects per one million products. Some auto makers achieve that high bar. That is why a Honda will just keep on running if you maintain it. It is built to that standard. Read Full Article…

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1. Prevalent Discrepancies in Current Healthcare Approaches: The healthcare system in the United States currently faces a significant issue with waste and variation, particularly in the treatment of heart disease and related conditions. Despite the high costs associated with healthcare, with companies like General Motors spending more on healthcare than on fundamental materials like steel, there is a glaring inconsistency in the quality of care provided. The variation is vividly observed in the implementation of life-saving treatments such as statin therapy, which is alarmingly underutilized even among specialists. This scenario presents a system that is not only alarmingly inefficient but also fails to meet the basic standards of quality, often characterized by a high rate of defects per million, illustrating a clear systemic failure.

2. The Imperative of Optimal Medical Therapy (OMT): Optimal Medical Therapy (OMT) is a comprehensive approach to treating heart artery disease that encapsulates a range of interventions including statin therapy, blood pressure control, smoking cessation, and aspirin treatment among others. Currently, the adherence to OMT is abysmally low with substantial repercussions both in terms of clinical outcomes and financial burdens. Institutions like Kaiser Permanente have demonstrated that a concerted effort can achieve substantially better outcomes through the implementation of processes akin to lean six sigma, achieving remarkable reductions in mortality and costs compared to conventional care.

3. The Necessity for a Paradigm Shift Toward Evidence-Based Practices and Robust Analytics: Despite the compelling evidence supporting OMT, the broader healthcare system remains fixated on procedures with lesser efficacy, such as artery blockages, thereby exacerbating costs without improving patient outcomes. Employers now bear a significant fiduciary obligation to ensure employees receive optimal care at fair costs, as mandated by the Consolidated Appropriations Act. To comply with this, employers and stakeholders must leverage robust analytics to identify and eliminate waste and variation in healthcare processes. Looking at successful examples globally, such as the advanced primary care clinics in Singapore, it is evident that a shift towards evidence-based practices and lean six sigma approaches can not only reduce costs but also improve clinical outcomes, fostering a healthcare system that is both effective and efficient. It's high time to refocus the American healthcare system towards what truly works, learning from global best practices and the promising outcomes from institutions utilizing OMT effectively.

Info blocking enforcement for health IT entities begins Sept. 1, brings fines of up to $1M per violation

By Dave Muoio - The Department of Health and Human Services Office of Inspector General said it expects to receive more complaints than it can investigate and so will be prioritizing those meeting certain criteria. Penalties will be handed out on a case-by-case basis, with the $1 million maximum reserved for "particularly egregious conduct," the regulator said. Read Full Article…

VBA Article Summary

1. Implementation of the Information Blocking Penalties: The enforcement of information blocking penalties by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) is set to commence on September 1st, targeting practices that hinder the access, exchange, or use of electronic health information. This new enforcement strategy opens up the potential for hefty penalties reaching up to $1 million per violation. The enforcement encompasses four types of entities: health IT developers of certified health IT, entities offering certified health IT, health information exchanges, and health information networks. Notably, any information blocking conduct before the enforcement date will not attract a civil monetary penalty.

2. Investigation and Prioritization of Cases: Given the anticipation of a large volume of complaints, the OIG has outlined a procedure to prioritize and handle these cases efficiently. The office plans to focus primarily on cases where the blocking conduct could potentially cause patient harm, significantly impact provider's ability to care for patients, involve long durations, cause financial losses to governmental or private entities, or are performed with clear knowledge. The OIG may collaborate with the Office of the National Coordinator for Health IT during a comprehensive investigation, which involves various methods like interviews and document requests. Entities implicated in a case will have the chance to engage in discussions and, if necessary, appeal any resulting civil monetary penalties.

3. Pending Regulations and Challenges for the Healthcare Industry: While the present enforcement deadline is restricted to health IT entities, a broader crackdown on healthcare providers is expected, presenting a more complex challenge for the industry. Historically, healthcare providers have struggled to comply with information blocking requirements, a concern exacerbated by knowledge gaps noted by various provider groups in 2022. Meanwhile, HHS is in the process of formulating another rule to establish specific disincentives for healthcare providers who do not fall under the four entity types identified for the September 1 enforcement. The new regulations build upon rules established in 2020, as part of the initiatives outlined in the 21st Century Cures Act to enhance patients' access to health information.

How self-funding and primary care can save even more

By Stephanie Gulnan - Implementing a primary care model into a self-funded plan can help employers build a benefits suite to match their businesses: smart, efficient and with peoples’ best interests at heart. In today’s highly competitive market, offering an attractive suite of benefits is critical for hiring and retaining top talent. For U.S. employers, that means covering employee health care costs. Read Full Article… 

VBA Article Summary

1. Cost-Efficiency and Flexibility in Self-Funded Health Plans

   Understanding Self-Funding: Majority of the companies are preferring self-funded healthcare plans where they directly pay for the employees' health care claims, a model that often results in savings compared to the fully insured plans which involve paying premiums to insurance companies.

   Financial Flexibility: The self-funded model offers financial flexibility to employers as they can dictate the utilization of savings accumulated from this strategy at the end of the fiscal year.

   Catastrophic Claims Protection: Employers have the safety net of stop-loss coverage which protects them from extremely high claim costs, though it comes with out-of-pocket costs and fees collected by Third-Party Administrators (TPAs).

2. Primary Care Model Integration in Self-Funded Plans

   Quality Care Access: Integrating a primary care model can foster a trusting relationship between doctors and patients, promoting early detection and treatment of ailments, which in turn can decrease healthcare costs.

   Promoting Inclusivity: Primary care models can potentially reduce racial and economic disparities in healthcare, fostering a more inclusive workplace environment.

3. Boosting Employee Satisfaction and Retention Through Primary Care

   Streamlined Claim Processing: Collaborating with a provider network can simplify the administrative process of handling various claims from different providers, reducing the hassle and possibly the costs associated with claims processing.

   Enhanced Employee Satisfaction: Offering access to primary care can significantly enhance employee satisfaction, which is critical in retaining valuable talent and minimizing the costs associated with hiring new employees.

   Implementation Strategies: Employers can explore different avenues to integrate a primary care model, including partnering with local clinics, setting up on-site healthcare facilities, or subsidizing direct primary care memberships. Advisors play a crucial role in helping to establish these setups, guided by the proven long-term benefits of self-funded healthcare plans with primary care integration.

By implementing a primary care model within a self-funded healthcare plan, companies can create a win-win situation where both the financial bottom line and employee welfare are taken into consideration, leading to a more harmonious and productive workplace.

The seismic shift in U.S. health care imposes big hurdles for providers as payors benefit from “flywheel effect”

By Brandon Edwards - In the “good old days”–let’s call that period pre-2008–the majority of commercial insurance was full-risk: increases came out of payor profitability rather than employers’ and consumers’ pockets, and patients were protected from high out-of-network/out-of-pocket costs. In 15-20 years, everything has changed. A lot. Read Full Article…

VBA Article Summary

1. Vertical Integration and Profit Maximization at UnitedHealth Group: UnitedHealth Group showcases a paradigm shift in the healthcare system by ingeniously leveraging its scaled assets to solidify its profit margins. This is notably illustrated through the interaction between its healthcare services division, Optum, and its insurance division, UnitedHealthcare. The Optum division, with its uncapped and unregulated profits, stands as a pillar for intercompany eliminations, a strategy that enables UnitedHealth Group to bolster its bottom line continually. This strategy not only encourages other providers to sell their practices to Optum but also facilitates UnitedHealth in maintaining remarkable profitability while adhering to federal MLR caps.

2. Rapid Growth and Profitability Through Optum: UnitedHealth Group's second quarter 2023 financials have highlighted a surge in the enrollment rates in their government businesses, with a notable spike in the profits generated from the Optum division. This section of the company has expanded its avenues, encapsulating physician practices and outpatient facilities acquired over the years. It registered a significant 25% increase in revenues, escalating from $45.1 billion to $56.3 billion, a development that further assisted in curbing an escalation in the overall medical loss ratio (MLR), a critical parameter indicating the percentage of revenue paid out in claims.

3. Industry Challenges and The Need for Vigilance: The strategies adopted by UnitedHealth Group are not isolated; other major players in the industry, such as Elevance (formerly Anthem and Wellpoint), are following a similar path, notably in avoiding claims on necessary treatments and medications as noted in Medicaid and Medicare Advantage programs. As tensions intensify between health systems, physician groups, and the business models of payors, there's a growing necessity for vigilance and strategic action to anticipate and counteract payor strategies before they gain widespread traction. Looking ahead, preparing for and navigating through potential issues in contract negotiations will be essential to weather the complex and evolving landscape of the healthcare industry.

Aon Report: Employers’ Healthcare Costs Will Top $15K Per Employee in 2024

By Mark Hagland - Health insurance coverage costs have been soaring, with more pressure being felt by employers, who cover the bulk of non-seniors in the U.S. Indeed, a new report finds, the rate of increase is set to double over the annual rate increases of the past few years, going into 2024. According to the results of a survey of employers by the London-based insurer and professional services firm Aon released on Aug. 25, average costs for U.S. employers that pay for their employees' health care will increase 8.5 percent to more than $15,000 per employee in 2024. Read Full Article…

VBA Article Summary

1. Increased Health Care Costs in 2023: Health care costs for 2023 have seen an increase. The projected rise in employer costs was 4.5%, nearly double from the previous year. Concurrently, employee premiums taken from their paychecks only increased by a modest 1.7% from 2022. On average, the health care plan cost per employee stands at $13,906. Notably, employers typically cover about 81% of these costs, leaving employees to pay the remainder, which includes out-of-pocket payments such as deductibles, co-pays, and co-insurance. For 2023, employees are contributing around $4,675 for health coverage, with $2,682 coming directly from paychecks and $1,993 paid through plan design features.

2. Factors Affecting Health Care Cost Trends: Since the outbreak of the COVID-19 pandemic, medical claim rates are returning to their regular growth levels, leading to predictions of further inflationary pressures in the near future. Debbie Ashford from Aon highlights that while there was a notable economy-wide inflation over the past two years, employer-sponsored health care costs did not experience similar dramatic hikes. This is largely due to the typical multi-year nature of medical provider contracts. Even as broader inflation starts to ease, health care trends are on the rise, driven by factors such as higher wage and supply costs that medical providers previously absorbed but are now pushing onto insurers. Other contributing elements include the emergence of new weight loss drugs, advancing medical technologies, the severity of catastrophic medical claims, and the growing prevalence of specialty drugs.

3. Variability in Health Care Cost Increases by Industry: Different industries are experiencing diverse rates of health care cost increments. The professional services sector saw the highest average employer cost rise of 7.5%. Conversely, the manufacturing sector recorded the most substantial average employee cost hike at 2.9%. The retail and wholesale sectors experienced the least change in employee contributions with a decrease of 0.5% from 2022 to 2023. Interestingly, compared to sectors like professional services and technology, healthcare organizations (as employers) have fared better, witnessing only a 3.2% increase in costs from 2022 to 2023.

'Landmark' Trial Shows Opioids for Back, Neck Pain No Better Than Placebo

By Megan Brooks - Opioids do not relieve acute low back or neck pain in the short term and lead to worse outcomes in the long term, results of the first randomized controlled trial testing the efficacy and safety of a short course of opioids for acute nonspecific low back/neck pain suggest. Read Full Article…

VBA Article Summary

1. Landmark Trial Results: The recently conducted OPAL study, spearheaded by senior author Christine Lin from the University of Sydney, illuminates the effectiveness and potential risks associated with using opioids for treating acute low back and neck pain. This significant trial, conducted at 157 primary care or emergency department sites in Australia with 347 adults participants, reveals no substantial difference in pain scores between patients who took opioids and those who took a placebo after a span of 6 weeks. A noteworthy observation was that the placebo group reported slightly lower pain scores after a year. This trial is termed as a "landmark" one with the potential to alter existing practices significantly.

2. Increased Risk of Opioid Misuse: A concerning revelation from the OPAL study is the doubled risk of opioid misuse in patients who were administered opioid therapy for 6 weeks when compared to those who received a placebo. This data was gathered after a 1-year follow-up, where 20% of patients who were under opioid therapy exhibited signs of potential misuse as opposed to the 10% in the placebo group, as indicated by the Current Opioid Misuse Measure (COMM) scale. This underlines the potential dangers associated with opioid prescriptions for managing acute pain in the neck and back regions.

3. Re-evaluation of Current Clinical Guidelines: In light of the results from the OPAL study, there is an urgent call to reassess the current clinical guidelines which often recommend opioids as a solution for acute back and neck pain cases, particularly when other drug treatments are unsuccessful or not recommended. This crucial research opens up a serious debate on the prevalent use of opioids, urging a thorough reconsideration of guidelines and practices to prevent potential misuse and to find more effective, safer alternatives for pain management. Lin emphasizes the need to communicate these findings extensively to both doctors and patients and to consider alternative management methods including staying active and using anti-inflammatory drugs if necessary.

Structuring life insurance premium finance when interest rates are high

By Michael Seltzer - When it comes to estate planning, wealth transfer planning and business transition planning, life insurance plays a crucial role in providing financial security and ensuring a smooth transfer of wealth. When borrowing interest rates were low, annually paying the premiums on policies with significant death benefit was not always the most cost-effective way to buy life insurance. By financing premiums, some policyholders were able to leverage low interest costs to use borrowed funds rather than to tap into money deployed elsewhere where it was earning a higher yield. Read Full Article… 

VBA Article Summary

1. The Shift in Premium Finance Landscape

   The Emergence and Flourishing Phase: Premium finance emerged as a powerful tool for facilitating sizable life insurance policies, especially during the period of low interest rates. It allowed high-net-worth individuals and businesses to leverage competitive borrowing rates for substantial estate planning and wealth transfer.

   Changing Dynamics: With the increase in borrowing costs, the strategy appears less viable for individuals focusing solely on augmenting future income through life insurance policies. These changes have primarily impacted prospective policyholders who do not have a substantial net worth, making the borrowing math increasingly unfeasible and risky.

   The Return to Original Intent: Despite the alterations in the market dynamics, premium finance remains a vital strategy for individuals and businesses with significant assets, focusing on utilizing life insurance policies for wealth preservation and business transition planning rather than merely future income.

2. The Prerequisites and Opportunities in Today's Market

   Qualified Buyers: The present market caters to buyers who have substantial financial assets and are familiar with leveraging investments. These individuals have the capability to manage the premiums without resorting to financing and aim to preserve liquidity through diverse investment avenues.

   Potential Beneficiaries: Individuals with substantial real estate holdings or businesses with shareholder repurchase liabilities stand to benefit from premium finance in the current interest rate landscape. It facilitates the acquisition of necessary life insurance coverage without necessitating the sale of assets or straining cash flows.

   Flexibility in Planning: Premium finance continues to offer a flexible approach to financial planning by providing opportunities for both wealth preservation through death benefits and potential future income avenues, thus enabling a holistic approach to financial planning.

3. The Importance of Risk Management and Expert Consultation

   Acknowledging Potential Risks: Engaging in premium finance comes with inherent risks, including high interest costs, default risks, market fluctuations, and varying collateral needs. Prospective policyholders must be aware of these potential pitfalls to make informed decisions.

   Expert Guidance: In the current high-interest rate environment, it is paramount to collaborate with seasoned professionals who can tailor premium finance strategies to individual needs and risk tolerances, optimizing the benefits and securing financial stability for the future.

   Keeping the Conversation Alive: Despite the evolving landscape, premium finance should remain a pivotal part of discussions surrounding life insurance purchase. It serves as a strategic tool for estate planning, wealth transfer, and business transition, enabling clients to leverage assets effectively and secure the financial future of their families and businesses.