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Stop-Loss Summit Issues


Many are predicting an upcoming growth in the demand for self-funding by small employers.  This will be a great opportunity for TPAs and the Stop Loss industry.  SPBA has heard that there are several Stop Loss vendors that are active in the small employer market and have been for many years.  We look forward to hearing more from the Stop Loss community on this trend. Caution:  Some State laws prohibit self-funding for small employers (e.g. California prohibits self-funding for employers with fewer than 51 employees). 

Question to S-L:  What are your actuaries, underwriters, and your general experience predicting will be the impact of the various new mandates on S-L policies?


The upcoming review standards imposed by PPACA are problematic:  If the outside reviewer says it should be covered by the plan, the plan has no choice but to cover the item.  There is the concern that carriers will argue that the stop loss policy only reimburses for expenses specifically covered in the plan document and not otherwise excluded in the stop-loss policy.  Suggestion:  Can TPAs and the Stop-Loss community agree to plan document language that would incorporate the requirements of the regulations, and protect the plan with stop loss coverage in the event a claim conflicts with the plan document but is required to be paid by the independent reviewer.    

Request: If the independent review organization comes back and says that the benefit must be paid, TPAs need the carrier to reserve out the claim and honor it even though payment comes after the close of the stop-loss contract for that year.  The carrier must be willing to pay the claim after the stop loss policy year has expired without imposition of a new policy year deductible. What kind of premium impact do S-L anticipate for such an arrangement?   


Background:  The interim final rules on dependent coverage of children to age 26 include a special rule for grandfathered plans under which a plan may exclude an adult child who has not attained age 26 from coverage only if the adult child is eligible to enroll in an eligible employer-sponsored health plan, other than a group health plan of a parent.

Issue: Dependent children may or may not have options under their own employer plan and these options could change throughout the year.  Will carriers accept the initial enrollment representation?  Will carriers require additional substantiation of dependent children status?    


Background:  The interim final rules on annual and lifetime limits create an enrollment opportunity for individuals who reached a lifetime limit under the plan, dropped coverage and are otherwise still eligible under the plan.

Issue:  The employer and TPA may not have knowledge of these individuals who could have a significant impact on claims and the stop loss carrier’s liability.   


Until there is clarification on the definition of “essential health benefits,” some plans are maintaining annual maximums below the minimum restricted annual limits.  If a hospital or other provider challenges the plan’s determination of an essential health benefit, these plans will continue to pay benefits even though the payments would exceed the annual maximum for the benefit set forth in the plan document.  How would S-L look at this exposure?  Would S-L rate up to the PPACA annual limit, or take into consideration the plan’s more limited benefit? 

We need some mutual strategy for situations where the S-L policy has an annual limit of $1 million, for example, and the plan document also has a temporary annual limit (also $1 million), but the S-L policy year is different from the plan’s calendar benefit year and/or the S-L policy is based on paid claims, and the plan is based on incurred claims.


Comment from both sides:  The appeals process needs to be clear and agreed to by all.


“Oh, the patient or plan is in X state, so there is no requirement for the 25-year-old child, or no pre-ex ,or no limits, etc.” 


Report on the implications for the S-L market?     


A noted frustration is the practice of not mirroring the underlying plan document from the point of exclusions, limitations and medical necessity.  When shopping for stop-loss, it is an unreasonable burden for a TPA or consultant to compare multiple S-L contracts with the plan document (point by point) to see where there is overlap and where there is not.  S-L should disclose the discrepancies at the point of quote, not at the point of claim.  Sometimes carriers will impose their own definition of medical necessity and their own exclusions or limitations even though contrary to the underlying plan.  This is why ASO carriers can look better to a consultant than a TPA.  Aetna S-L never says to a plan that they are overriding the definition of medical necessity.  Suggestion:  Industry wide S-L disclosure document that carriers sign with each quote stating that they take the risk as outlined in the plan document as written or if not then they outline the differences in writing.  It would be signed by a binding authority at the company. 

Comment from both sides:  Innovation needs to originate with the plan document, allowing TPAs and S-L to maximize their cooperation and efficiency.  There must be up-front communication and planning to avoid gaps that can become serious problems later.

Language Definitions – Can we, as an industry, agree to standard definitions of common terms used in plan/policy language that seem to cause repeated problems with respect to stop-loss reimbursement.  Some of the terms include:  Medically Necessary (or Medical Necessity); Experimental, Investigational; Clinical Trial; FDA Approved Drugs (often administered off label in treatment that may be deemed “medially necessary” but may not be the “standard of care.”); Reasonable (versus PPO contract rate); Paid.  


Suggestion from S-L:  TPAs always say: “You’re the only one asking for _____ ;” or, “Why do you need ___ ?”  Use that as a learning opportunity of something that should be mentioned up front, and also shared with other carriers considering your case.


Outside auditors sent by S-L to examine details of a claim filed with S-L often come to conclusions about what the charge or payment should have been, often without clear, defensible statistics or evidence.  S-L then cuts the S-L reimbursement based on the auditor’s findings. 

SPBA Comment:  This can create a serious ERISA fiduciary issue for the S-L or employer.  S-L is seen as self-serving without ironclad proof, and/or the employer “guilty” of not paying what the plan seems to have promised.  It can also leave the employer disillusioned with self-funding because he gets left stuck with the cost he believed was covered by S-L.  Any kind of unhappiness is risky in this era of activist government eager to “reform” ( as demonstrated by the beating insurers are getting).    


Mutual concern:  Lasers, good or bad and where do we go from here?  Many stop loss carriers have expressed a desire to eliminate lasers altogether, but TPAs have requested them.

History:  In SPBA’s earliest forum with S-L twenty years ago, the big issue was lasers.  TPAs wanted them to disappear.  Because of ongoing discussion, lasers did virtually disappear.  However, soon, it was TPAs who pressured more and more S-L to offer a laser (usually for a logical reason such as an employer was willing to accept a laser on a person long in remission, or because the employer needed the lowest possible up-front S-L price).  TPA pressure for the lowest price soon led to lasers to become dominant again.  At a S-L session a couple of years ago, the S-L present said that they would prefer to offer no lasers, and the cost would be reasonable (about 11%), but they said that TPAs were unwilling to sell the no-laser policy to their clients.

SPBA Comment:  HIPAA nondiscrimination rules have prohibited different treatment for participants with health conditions.  If a lasered individual incurs large claims, plans are required to provide coverage without regard to the laser.  With the prohibition on annual and lifetime limits (“restricted annual limits” for a few years), the potential consequences from a laser become more significant.

Reversal of “no new laser” contracts – One TPA recounts the following experience:  Year one the account pays a premium for a “no laser” at renewal for year two.  The carrier is hit with a claims or claims.  At renewal for year two the carrier pulls the “no new laser” agreement from the table.  Year three, full lasers are back.

Cases with poor loss ratios receive increases of 50% to 200% or higher if they don’t accept lasers.  Is there any motivation to get back to the basics and keep pace with medical inflation across all accounts? 

How can we best jointly handle outrageous mark-ups from hospitals on implantable devices?  Occasionally, TPAs and S-L come to different decisions, which can leave the plan or beneficiary dangling.  There seems to be a need for a joint-effort to have some credibility and clout so hospitals don’t just say “no” and balance bill the participant (a killer for client retention).

Most reinsurance carriers request that we obtain invoices from the facility if medical supplies/equipment exceeds a certain percentage of the total charges.  Most facilities will not provide us copies of those invoices leaving us in a really tough position.  The reinsurance carrier will not process the reimbursement until they receive the invoice and the facility will not provide it.  The reinsurance carriers are requesting more and more documentation before they will reimburse on high dollar items.  The facilities often consider this information proprietary and will not release it.  Can we identify the common problem areas and address the protocol acceptable prior to contracting or issuing the policy so all understand the terms of coverage and the expectations? 

How can we work together to promote increased billing transparency from providers?  


This issue involves the variation in the PPO discounts taken pursuant to the disclosed and defined network versus the definition of “reasonable” as determined by the Stop Loss carrier.  According to one TPA, S-L often want to re-price claims previously adjudicated by the TPA pursuant to the PPO contract and reduce the reimbursement request on a paid claim.  Can the “rules” be defined to protect the interest of the plan and the S-L carriers by identifying areas of abuse and a predefined process of review required for certain areas prior to taking the PPO discount?

There is an issue when a repricing error occurs by a contracted network and a revised pricing is provided to the TPA for reprocessing after the close of the S-L policy year. 


TPA concern:  It would be helpful to the industry if we could all agree on a definitive expert source (CMS for example) for standards of care.  If CMS said the clinical trial or treatment in question is within their scope of an acceptable standard of care, then the item would be covered.   

Congress and the Obama Administration definitely are aiming to stop and apply draconian punishment for any pre-ex restrictions, retroactive cancellations, and other risk-avoidance practices.  TPAs worry that if S-L is seen as doing anything that the government chooses to view as this kind of practice, they will swoop down on S-L and drive them out of the market.  We and the nation need you.

SPBA Comment: The group market reform provisions were added to the HIPAA portability rules and therefore carry the same penalties as HIPAA violations.  There is a $100 per day per participant penalty under the IRC, as well as potential lawsuits.  The penalties apply to the plan.  Given the complexity of the statutory language, other new penalties may apply.


Question from TPAs to S-L:  Speaking from your wide general experience and observations (not officially from your firm), what do you see or predict about brokers in the future?  Demise?  Billing directly?  Doubling-down on self-funded clients and TPAs?  What should all of us be doing or preparing for? 


Caution from S-L:  If a TPA has a profit center of UR or whatever service, it will be held to an extra-high standard of professionalism and fairness (to avoid even the slightest possibility of favoring the TPA’s own clients).


If a S-L uses a specialty vendor, such as for cancer treatment, the TPA notifies the vendor of a cancer patient, and the vendor contacts the patient to try to move them to their own contracted care provider. The S-L vendor needs to be certain there is good communication to avoid confusion or stress during the vendor’s efforts to steer the patient during this time of stress.



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