The Legal Quagmire under the ACA (HEALTH ME! I M DROWNING!)

Transcription

1 The Legal Quagmire under the ACA (HEALTH ME! I M DROWNING!) California Association of Health Plans October 23, 2013 Bill Helvestine Crowell & Moring LLP San Francisco Office

2 Topics The Behavioral Health Quagmire Essential Health Benefits & Habilitative Care Benefits Non-Discrimination Provider Non-Discrimnation Health Plan Liability for Failed IPAs Taking a Ride on the MLR

3 The Expanding Behavioral Health Quagmire

4 Essential Health Benefits Ambulatory Patient Services Emergency Services Hospitalization Maternity & Newborn Care Mental Health & Substance Abuse including behavioral health treatment Prescription Drugs Rehabilitative & Habilitative Services Laboratory Services Preventive & Wellness Pediatric Services, including oral & vision care

5 Autism Applied Behavioral Analysis (ABA) Issues Educational vs Health Care? Licensed vs Unlicensed Providers? A Basic Health Care Service? Mental Health Parity? Efficacy? SB 946 (effective July 1, 2012) Mandated ABA Coverage Created QASPs Expressly excluded CalPERS, Medi-Cal and Healthy Families

6 The Licensure Issue California Watchdog v DMHC Issue: Must health plans pay for ABA by unlicensed practitioners? DMHC Position: No CDI Position: Yes Isn t the issue moot in view of SB 946? Yes, as to the vast majority covered by SB 946. No, as to CalPERS and others excluded from SB 946.

7 California Watchdog v DMHC Court of Appeals Opinion (September 2013) ABA has indisputably been documented to be successful in treating the symptoms of autism ABA is somewhat unique among medical treatments in that it is provided by unlicensed practitioners. DMHC was OK to condition coverage on licensure prior to July 2012 (SB 946) Prior to 2012, the practice of ABA was the unlicensed practice of psychology a crime! SB 946 implicitly approved certified ABA providers (QASPs) and mandated health plan coverage for ABA

8 California Watchdog v DMHC Big Oops! Watchdog s Petition for Rehearing The consequences that might result from the Court s unprecedented and unanticipated ruling are potentially devastating. Most ABA practitioners would not qualify as a result of their education, training and scope of practice for any other license in California. Could any of them now face prosecution for criminal offenses supposedly committed only 15 months ago? Opinion VACATED October 9

9 California Watchdog v DMHC What about CalPERS and Medi-Cal which were expressly excluded from SB 946. This section shall not apply to [Medi-Cal and CalPERS]. Court of Appeals (now vacated): Cannot exclude these services as unlicensed care because the Legislature implicitly approved ABA providers. But the underlying mandate to cover ABA does not apply to Medi-Cal and CalPERS.

10 California Watchdog v DMHC What about the DMHC s position that ABA by unlicensed practitioners is not health care but educational? Court of Appeals (now vacated): Rejects this novel argument that has no support in law or logic. Then what about FEHBP s position? The OPM Benefit Review Panel recently evaluated the status of Applied Behavior Analysis (ABA) for children with autism. Previously, ABA was considered to be an educational intervention and not covered under the FEHB Program. (OPM Bulletin, May 2012)

11 California Watchdog v DMHC Does Harlick and the Mental Health Parity Act mandate CalPERS coverage for ABA? Court of Appeals (now vacated): The precise scope of the coverage required under the MHPA is not before us. We are not concluding that health plans exempted from the ABA statute [SB946] are, in fact, subject to its terms.

12 Mental Health Parity Federal Mental Health Parity: non-quantitative treatment limitations Pre-authorization Requirements Utilization Review Protocols & Criteria California Mental Health Parity Act [Health plans] shall provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses under the same terms and conditions applied to other medical conditions as specified in subdivision (c). Does this mean parity as in the Federal Act, or is it a mandate for All Medically Necessary Services??

13 All Medically Necessary Behavioral Health Services Harlick v Blue Shield, 9 th Cir., Aug. 26, 2011 California s MHPA does not merely require parity between mental and physical treatment It is an expansive mandate to cover ALL medically necessary services for mental conditions Even if the plan does not cover those services for physical conditions The only parity that MHPA requires is for the financial limitations like copays and deductibles Blue Shield s plain, clear and conspicuous exclusion for residential treatment facilities, held invalid

14 Mental Health Parity Residential Treatment Facilities? Expressly left open under the PPACA regulations What about other exclusions? Unlicensed providers? Harlick: Plans must cover medically necessary services by unlicensed providers unless they have licensed providers who will provide the same services. Custodial care? Non-FDA approved drugs? Equine therapy? Surf therapy? Durational limits such as max 100 days in a SNF?

15 What does Parity mean? Is it just the numerical limits (copayments, deductibles, annual limits, number of visit limits)? Parity in utilization review? UR process UR criteria Parity in substantive benefits? Can you exclude services that are unique to mental health and have no equivalents in physical health? Residential Treatment? Behavioral Pharmaceuticals? Music or dance therapy? Custodial care and ADLs? (Alzheimers facilities)?

16 Mental Health Parity Rea v. Blue Shield of California, CA Superior Court, No. BC (Sept. 2, 2011) California trial court refused to follow Harlick, finding the federal court misinterpreted the MHPA Currently on appeal, no hearing scheduled yet CAHP filed an Amicus Curiae brief The Harlick interpretation would render the Parity Act a misnomer by fundamentally changing the Act into an expansive benefit mandate that has no basis in the legislative history or common understanding of the Act during the 14 years since its enactment. Expect decision by mid-2014

17 EHB s and Habilitative Services EHBs under the ACA include Rehabilitative & Habilitative Services Habilitative Services are defined in California to mean services that are: Medically necessary Health care services That assist in acquiring or improving skills and functioning Needed for functioning in interaction with an individual s environment. [H&S Code (p)(1); Ins. Code ]

18 EHB s and Habilitative Services But California habilitative services expressly exclude: Educational Services Custodial Care Respite Care Recreational Care Residential Treatment (the Harlick decision??) [H&S Code (p)(1); Ins. Code ]

19 Benefits Non-Discrimination

20 Benefits Non-Discrimination PHSA 1302: In defining essential health benefits, the Secretary shall: not make coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life ensure that health benefits established as essential not be subject to denial... on the basis of the individuals age or expected length of life or of the individuals present or predicated disability, degree of medical dependency, or quality of life

21 Essential Health Benefits What about Utilization Review Criteria? Alcoholism as a criteria for liver transplants? Advanced age as a criteria for transplants or major surgery? Expected length of survival or quality of life as criteria for transplants? End of life decisions such as DNR? Will the Act alter criteria used in the practice of medicine and in utilization review?

22 Provider Civil Rights -- Non-Discrimination under the ACA --

23 Provider Non-Discrimination under the ACA First federal provider non-discrimination law applicable to non-government programs First provider non-discrimination law applicable to self-insured ERISA plans Applies across categories of providers (e.g., chiros, podiatrists, osteopaths, optometrists, acupuncturists, clinical social workers)

24 What are the Providers Saying? The most significant piece of federal legislation in many years. We have pierced the shield of ERISA with this provision. It s huge. It won t be warmly embraced by the insurance industry at best, it will be grudgingly accepted. Amer. Chiropractic Ass n This provision should stop health plans from having a blanket policy of not covering counselors Amer Counseling Ass n

25 The Harkin Amendment to the ACA A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider s license or certification under applicable State law. This section shall not require that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer. Nothing in this section shall be construed as preventing a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures. [Public Health Services Act 2706(a); 42 U.S.C. 300gg-5(a)] Also incorporated into 715(a)(1) of ERISA and 9815(a)(1) of the Internal Revenue Code 25

26 CCIIO Does Not Intend Clarifying Regulations Q2: Will the Departments be issuing regulations addressing PHS Act 2706(a) prior to its effective date? No. The statutory language of PHS Act section 2706(a) is self-implementing and the Departments do not expect to issue regulations in the near future. Health plans and insurers are expected to implement the requirements of PHS Act 2706(a) using a good faith, reasonable interpretation of the law. To the extent a service is a covered benefit under the plan, and consistent with reasonable medical management techniques with respect to the frequency, method, treatment or setting, a plan shall not discriminate based on a provider s license or certification, to the extent the provider is acting within the scope of the provider s license under applicable state law. This provision does not require plans or issuers to accept all types of providers into a network. This provision also does not govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations. [CCIIO, ACA Implementation FAQs, Set 15, April 29, 2013] 26

27 To what plans does it apply? Group health plans and health insurance issuers offering group or individual health insurance coverage Self-insured employee health benefit plans Group health insurance Individual health insurance Likely includes Federal Employees Health Benefits Program Will apply to products sold via the new health insurance Exchanges Effective the beginning of the applicable plan year on or after January 1, 2014, except for grandfathered plans 27

28 To what plans does it not apply? Does not include Medicare, Medicare Advantage, Medicare Supplement or Medicaid Medicare Advantage plans already are prohibited from discriminating, in terms of participation, reimbursement, or indemnification, against any health care professional who is acting within the scope of his or her license or certification under state law, solely on the basis of the license or certification. Workers compensation, credit-only insurance, on-site medical clinics coverage, automobile medical payment insurance, liability insurance, or supplements to liability insurance 28

29 To what plans does it not apply? Appears not to apply to limited scope dental or vision benefits or long-tem care, home health care, or nursing home care offered in connection with a group health plan If provided under a separate policy, certificate or insurance contract; and Not otherwise an integral part of the plan Does not apply to specified disease or illness insurance or hospital indemnity or other fixed indemnity insurance if provided under a separate policy or contract and there is no coordination between those benefits and any exclusion of benefits under a group health plan of the same plan sponsor [42 U.S.C. 300gg-21c, -91(c)(2)] 29

30 Provider Non-Discrimination Prohibits discrimination against a provider acting within the scope of license Prohibits discrimination on the basis of participation or coverage Reference to coverage reaches benefit plan design, e.g., services covered, benefit limits, and enrollee cost-sharing. Does NOT require plan to contract with any willing provider Does NOT prevent the plan from varying reimbursement rates based on quality or performance measures 30

31 Provider Non-Discrimination By rejecting any willing provider, the law recognizes that a Plan may refuse to contract with individual providers. The refusal of an individual contract should not be improper discrimination. What, then, is prohibited discrimination? The exclusion of or discrimination against classes of providers. Osteopaths Podiatrists Chiropractors Optometrists Acupuncturists Colorado DOI: Disapproved the existing exclusion for chiropractic services in that state s EHB Benchmark Plan What else will be prohibited discrimination? 31

32 Examples of potentially questionable practices Discrimination based on different negotiated rates? Resulting from different market power? The marquee practice problem Note CIIO FAQ: provider reimbursement rates may be subject to quality, performance, or market standards and considerations. Must the same service always be paid the same? Paying optometrist less than ophthalmologist for the same service? Physicians vs Nurses vs Physician Assistants? Is this varying reimbursement rates based on quality or performance measures? Having a closed panel benefit for optometrists, podiatrists or chiropractors but an open access benefit for ophthalmologists and orthopedists? 32

33 Other potential battlegrounds Explicit discrimination vs. discriminatory effect? Facially neutral practices that have a discriminatory effect Requiring particular certification, training or experience that are theoretically available to non-md practitioners, but that in practice are more difficult for non-mds to satisfy? Imposing new credentialing criteria that are hard for non-mds to meet, but grandfathers the existing network which includes few non-mds? Pay-for-Performance Programs Reimbursement can vary based on quality or performance measures, but are existing performance measures statistically valid measures of quality or performance, or will they be challenged as a subterfuge for discrimination? 33

34 Horizontal Provider Non-Discrimination Federal Mental Health Parity & Equity Act: Non Quantitative Treatment Limitations Standards for Provider Admission into Network Including provider reimbursement rates Psychiatrists versus Other MDs CPT Codes and their Reimbursement Rates Psychiatrist as Primary Care Physician 34

35 American Chiropractic Association v American Specialty Health Networks and Cigna (E.D.Pa. No., filed Dec. 28, 2012) Lawsuit based primarily on alleged ERISA violations. Alleges, among other things: False and misleading EOBs Overly restrictive UR on chiropractors Excessive co-pays for chiropractors Discriminatory restrictions on services that fall within the scope of the chiropractic license Motions to Dismiss and to Change Venue, pending. 35

36 Health Plan Liability for Failed IPAs

37 Health Plan Liability for Failed IPAs Recent litigation sparked by financial collapse of Capitated/Delegated Providers La Vida Bellflower MaxiMed Issue is whether the health plan is liable for physician or hospital claims left unpaid when the IPA fails.

38 Health Plan Liability for Failed IPAs Health & Safety Code 1371: The obligation of the plan to comply with this section [timely claims payment] shall not be deemed to be waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.

39 Health Plan Liability for Failed IPAs Existing Law: CMA v Aetna (2001): Health plans not liable to IPA contracted physicians who signed contracts to look solely to the IPA for payment Desert Healthcare v Pacificare (2001): Court abstained from this complex economic issue subject to DMHC regulation. Cal. Emergency Phys v. Pacificare (2003): Health plans not liable to non-contracted emergency physicians; rejects negligent delegation theory Ochs v Pacificare (2004): Same, but suggests possibility of a negligent delegation theory

40 Health Plan Liability for Failed IPAs Centinela Freeman ER Physicians v Health Net et al Plaintiffs are non-contracted ER physicians whose claims were left unpaid by LaVida They argue that the ban against balance billing the patient changed the law, so that they should have a remedy against the health plans In 2011, the trial court dismissed the lawsuit. Appeal Pending CAHP and CAPG filed Amicus Curiae briefs Opposing Amicus briefs filed by CMA and CalACEP Expect decision in early 2014

41 Taking a Ride on the MLR

42 Medical Loss Ratio under PPACA Insurers must meet minimum MLR Large group market 85% Individual and small group market 80% States may set higher MLR HHS Secretary may adjust MLR for individual market to prevent destabilization Rebates: Insurers that fail to meet the minimum MLR must provide rebates to employer (or policyholder)

43 MLR Potential Compliance Issues Examples of MLR Compliance Issues: Broker commission practices that incentivize steering Employee compensation (bonuses) that may incentivize the avoidance of MLR rebates Mid-year Premium Holidays to avoid end of year rebates? Mid-year provider contract rate adjustments Provider risk sharing measured by MLR stats Selective (discriminatory) premium adjustments that reduce MLR rebates Appropriate identification of Quality Improvement expenses Rebate distribution practices Accounting for Pharmacy Benefit Expenditures Other carve out benefit providers Capitated Providers Vendors

44 MLR Case -- Wellcare (U.S. v. Farha et al., M.D. Fla.) Involves Florida Medicaid s 80% MLR Rebate Requirement for behavioral health care services provided by managed care plans Wellcare is alleged to have fraudulently reduced MLR refund by: Creating a wholly-owned, capitated provider to conceal costs and increase expenditures reported to Medicaid False worksheets submitted to Medicaid Issuing rebate based on inconsistent and improper methodologies across various reporting periods to avoid scrutiny Failing to respond truthfully to requests for information Wellcare is reported to have paid over $427 million in settlements with governments and shareholders.

45 MLR Case Study Wellcare (U.S. v. Farha et al., M.D. Fla.) Criminal indictments against 5 former Wellcare executives June 2013: 4 of the 5 tried and convicted CEO, CFO and 2 Vice Presidents General Counsel to be tried separately

46 Questions?