Recently, professional services company CBIZ’s vice president of regulatory affairs sent an internal memo stating, “Hyperbole though it may be, the world of employee benefits is changing far more rapidly than the structure intended to support it.”
Are you familiar with the duck test? It goes something like this: If it looks like a duck, walks like a duck and quacks like a duck, it’s probably a duck. Along these lines, her memo urged us to consider if a program provides medical benefits or is sponsored by an employer when assessing a new employee benefit offering.
If the answer is yes, then the program is probably an employer-sponsored health plan. If it is, we must next ask these questions:
· What headwinds and penalty risks could the Patient Protection and Affordable Care Act, ERISA, COBRA, HIPAA and other related laws create for this new offering?
· If the health plan is compliant conceptually, can it be compliant in real life?
Nowadays, this last question is often the most important. As a case study, let’s review this quick telemedicine tale:
A few months ago, CBIZ began providing benefits consultation to a mid-sized employer. This employer sponsors a self-funded group health plan with three plan design options: qualified high-deductible health plans, HMO, PPO. Telemedicine benefits are provided by a specialty vendor via a partnership with the health plan’s third party administrator). This partnership allows the telemedicine claims to flow through the health plan, just as regular office visit claims do.
This employer introduced telemedicine benefits primarily to improve employee and dependent mental health by expanding access to quality behavioral health professionals. However, our initial audit revealed that behavioral health services were not, in fact, part of the telemedicine suite purchased. Apparently, the TPA had somehow miscommunicated with the employer.
Thus, we began researching ways to incorporate behavioral health services into the telemedicine benefit. Our subsequent research confirmed:
· While the telemedicine specialty vendor offers these services, the health plan TPA cannot (or will not) incorporate these services under the TPA’s umbrella. The TPA could not (or would not) articulate exactly why this integration was not possible.
· If the employer contracted directly with this telemedicine vendor, instead of via the TPA, behavioral health services could be offered.
· Other TPAs offer behavioral health telemedicine services under their proprietary telemedicine platforms or via specialty vendor partnerships. Thus, a solution was changing TPAs.
Ultimately, this employer decided not to change health plan TPAs. Thus, we began exploring the path of contracting with this telemedicine vendor directly. Our exploration began with the above duck test questions and these responses:
· Yes, the carve-out telemedicine program provides medical benefits.
· Yes, the program is sponsored by the employer. However, it will not be a separate health plan. Just as the prescription drug carve-out platform integrates with the overarching health plan, so will the telemedicine benefit.
· Specific to the ACA market-reform rules: Because, for example, the health plan TPA will receive a claim file from the telemedicine vendor, the HMO and PPO member-level copayments will accrue toward the health plan out-of-pocket limits the same way that prescription drug copayments already accrue. Similarly, via this claim file, the full cost of the telemedicine service will accurately accrue toward the deductibles of the HDHP enrollees, ensuring that the HSAs of these enrollees are not disqualified. Finally, because the TPA will incorporate the telemedicine benefit design into the health plan document and summary plan description just as prescription drug design is currently incorporated, the various ERISA reporting, documentation and disclosure requirements will continue to be met.
However, being conceptually compliant is not the same as being compliant in real life. Structural challenges quickly emerged.
First, the health plan TPA refused to incorporate the telemedicine benefit design into the health plan document and summary plan description. Because prescription drug benefits are already incorporated, this position was nonsensical. However, as we considered workarounds, including hiring an ERISA attorney to prepare a wrap document, a bigger challenge emerged.
In working through our real-life compliance checklist, the telemedicine vendor confessed that it would not send a claims file to the health plan TPA. Its solution, instead, was to post the explanation of benefits to a website and have the plan participants download and file these documents with the health plan TPA. A potential nightmarish scenario resulting from this circumstance: An employee who reaches the health plan out-of-pocket maximum via medical and prescription drug claims forgets to file these telemedicine EOBs. This inaction causes the employee to spend more out of pocket on health plan expenses than the plan allows. Among various compliance risks that this violation could create is the triggering of the ACA’s 4980D, $100 per-day per-affected individual penalty.
A possible solution to this out-of-pocket compliance challenge is eliminating all telemedicine employee cost-sharing. But, that solution walks right into a new challenge: If the telemedicine benefits do not accrue toward the HDHP’s deductible, the HDHP will no longer be qualified. Thus, HDHP enrollees will no longer be eligible to contribute to HSAs.
There is no feasible way to contract with the telemedicine vendor directly, continue to partner with this TPA and keep the health plan in compliance.
However, it turns out that this health plan’s network recently began contracting with certain local behavioral health professionals who now offer telephonic services. In other words, in lieu of traveling to the practitioner’s local office, the patient can simply make a phone appointment.
Conceptually, because the employees and dependents would utilize in-network practitioners via the medical portion of the health plan, all of the above compliance issues are eliminated.
When pressed, the health plan TPA inexplicably said that it cannot administer these network claims either. We suspect that this “cannot” is really a “don’t want to.” I’ll let you know how this story ends. In the meantime, please consider investing 15 minutes to review your benefit programs and determine if your company is sponsoring any health plans posing penalty risks to your company and your employees.
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