Lasering of Shock Claims by Stop Loss Carriers

[Guest Ira Hayes]

In face of a bad year in terms of stop loss experience due to an ongong renal transplant failure, a self funded (with stop loss) medical plan sponsor is considering the imposition of severe limits on expensive dialysis treatments for all plan participants and their dependents effective at the next stop loss contract year renewal.

What are some of the legal, ethical, financial, moral and communciations issues that need to be considered (if there are none which can't be resolved, could this technique be extended to cancer, heart disease, HIV/AIDS and other high cost diagnoses)??

[leevena]

Wow, you have many questions in this post, all of which can be complicated. Let me start with some easy responses, which are general in nature.

A self-funded group can structure their benefit plan as they see fit. For example, the benefit plan could make certain expenses (HIV) ineligible, or limit the benefit amount. (If you do this, you may want to have an alternative option available, such as a HMO, where the employees can go for full coverage)

I would start with your stop-loss carrier. They can provide you with the issues that need to be addressed, from which you can make your decisions. You should also bring into the discussion your benefits attorney. Beyond the usual administrative and benefit legal issues, you may be facing disgruntled employees/insureds who will be affected by this decision.

As a side note, you may want to consider an aggressive Disease Management or Wellness program for this group. These programs can help identify employees/dependents at risk and bring in strategies to help minimize utilzation and costs.

[Don Levit]

Ira:

There is little I would add to Leevena's excellent reply.

The plan sponsor can establish maximim benefit limits , as long as they are uniform for all participants and beneficiaries.

I have learned about lasering from another chat group I am in.

I understand the insurer could increase the deductible for only the renal transplant employee, in the amount of the anticipated expenses for the following year.

Or, alternatively, the group could absorb the increased cost.

Don Levit

[leevena]

Good point Don. I actually forgot to mention that. The practice can actually go beyond what you stated. As with a laser that pinpoints one specific thing, so does this for Stop Loss. The carrier can actually laser the risk out of the plan completely.

[Don Levit]

Leevena:

I wonder how this lasering of the deductible gets past the discrimination issue?

Is it due to the stop-loss carrier being a "nonregulated entity" for health insurance purposes?

Don Levit

[leevena]

Don. Don't know the answer, it's just something they have been doing for years.

[Guest Farv43]

I realize this topic was from last year but I have an additional question. Do you know if there is a regulation in the Medicare Secondary Payer rules that would not allow limiting dialysis coverage in a self funded plan?

[J Simmons]

This snippet might help; it is footnote 1 to Rev Rul 2004-22, IRB 2004-10:

The Medicare Secondary Payer (MSP) provisions of the Social Security Act that apply with respect to individuals entitled to Medicare based on the attainment of age 65 --generally referred to as the "working aged" MSP provisions (section 1862(b)(1)(A), 42 U.S.C. § 1395y(b)(1)(A)) --include two restrictions on most group health plans that are subject to the COBRA continuation coverage requirements. (The working aged MSP provisions and the COBRA continuation coverage requirements both include an exception for plans maintained by an employer with fewer than 20 employees. However, they differ in how the 20 employees are counted, creating the possibility that a plan exempt under one law will be subject to the other law.)

First, the working aged MSP provisions prohibit a group health plan from taking into account that an individual (or the individual's spouse) who is covered under the plan by virtue of the individual's current employment status with an employer is entitled to Medicare benefits by reason of the attainment of age 65. Second, the working aged MSP provisions also require a group health plan to provide that any individual age 65 or older (and the spouse age 65 or older of any individual) who has current employment status with an employer is entitled to the same benefits under the plan under the same conditions as any individual (or spouse) under age 65.

The MSP provisions also prohibit a large group health plan (a plan of an employer that employs at least 100 employees) from taking into account that an individual or a member of an individual's family who is covered under the plan by virtue of the individual's current employment status with an employer is entitled to Medicare based on disability. (42 U.S.C. § 1395y(b)(1)(B).) In addition, the MSP provisions generally prohibit a plan from taking into account that an individual is eligible for or entitled to Medicare benefits based on end stage renal disease during a coordination period of 30 months. (42 U.S.C. § 1395y(b)(1)©.)

Also check Soc Sec Reg § 411.160