7/1/2020 - Will the SEHBP be ETBT?
As I'm sure you're aware, there has been quite a bit of conversation regarding the Chapter 78 Relief Bill (you may also hear this referred to as "Educators Health Benefits Fairness Act" or "S2273").
One of the biggest questions we have is whether or not groups that are currently in private plans can join the SEHBP on or after 7/1/2020 without violating the Equal to or Better Than (ETBT) provisions of their CBA. In this post we will explore three unique examples:
SEHBP change for Direct 10 & Direct 15 Out of Network (OON) Payments to Chiropractor, Physical Therapist, and Acupuncture
Elimination of the MMRx option
Elimination of all but Direct 10, Direct 15, and Educators Health Plan
DISCLAIMER: This is not legal advice, this is simply an opinion piece to help facilitate conversation with your board, employees, broker, and board attorney.
1. SEHBP change for Direct 10 & Direct 15 Out of Network (OON) Payments to Chiropractor, Physical Therapist, and Acupuncture
S2273 h. Any plan offered by the School Employees' Health Benefits Program shall require that chiropractic, physical therapy, and acupuncture benefits shall be subject to the same out-of-network limits as for the State Health Benefits Program that are to take effect as of April 1, 2020 or as soon thereafter as reasonably practicable.
The bill states that the SEHBP is going to transition out-of-network payments for chiro, PT, and acupuncture to match the payment schedule of the SHBP.
In the SEHBP, those providers are paid based on 90th percentile of FAIR Health. This is a national benchmark that means that 90% of providers will accept this payment as payment in full. When comparing this to another benchmark, the Medicare rate, 90th% FAIR Health generally pays between 300% to 400% of Medicare.
Liberty took a look at how the SHBP handles these payments, by way of the publicly available SHBP Summary of Benefits and Coverage (SBC). It reads as follows:
"Out-of-network coverage for chiropractic and acupuncture services is limited to NO MORE THAN $35 a list for chiropractic and $60 a visit for acupuncture or 75% of the in-network cost per visit, whichever is less.
This drastically reduces the amount of money these providers are able to collect from the Health Plan. In some instances this may reduce provider payments by 70% or more.
Is it an ETBT issue?
Always seek legal guidance through your board attorney. Keeping that in mind, every time a group transitions from the SEHBP to private coverage or from one private carrier to another, an equal to or better than letter is provided by the new carrier. Let's take a look at an excerpt from one of those letters:
"In the event that an eligible, enrolled plan participant has a benefit paid under [carriers name] program that is not equal to or better than the existing benefit plan then [carriers name] shall ensure he or she is made whole based on how the plan of benefit under the existing benefit plan would have been paid. This does not apply to the application of any usual and reasonable amounts applied to out of network claims."
It's a commonly held belief in the broker community that out of network provider payments are not subject to ETBT provisions. (again, check with your board attorney for formal guidance).
With that said, the SEHBP has been paying excessively high amounts to those service providers or many years without any real oversight. The chiro/PT/acupucture providers picked up on this and began targeting groups inside the SEHBP - which absolutely makes sense from a business standpoint, since that's where they'll get paid the most for their services. Along those lines, the number of SEHBP participants that perpetually seeks these services is significantly higher than any average benchmark I've ever seen. In fact, the frequency with which these participants seek chiro/PT/acupuncture has caught the eye of ProPublica.
So while I do not believe it is an ETBT issue, I believe that this will be a sticking point for any group looking to transition from a private plan to the SEHBP. Assuming that the private plan pays chiro/PT/acupuncture providers a higher reimbursement, you will most certainly get pushback from the local bargaining unit.
2. Elimination of the MMRx Option.
Full disclosure, this is one that I've heard through the grapevine. I cannot point to a part of S2273 that explicitly states that the MMRx Option will be removed, but there is quite a bit of chatter about it in the brokerage space, so it makes sense to address it.
As you know, the SEHBP offers two Rx options for groups to choose. You can choose the "standalone" aka copay option, or you can choose the "MMRx" aka coinsurance option. You can't choose both in the SEHBP, it's one or the other.
The MMRx/Coinsurance option is the less expensive of the two. The benefits are still very rich, so it is common for districts to use that as a bargaining chip during negotiations. Anecdotally, I know many districts that have chosen the MMRx option.
Now, let's say you're currently in the SEHBP and the MMRx option gets removed - there's not much you can do about that. In general, the State is allowed to make unilateral changes.
If you're outside of the SEHBP and the MMRx/Coinsurance option is set for all of your health plans, would it violate the ETBT provision of the CBA to transition into the SEHBP?
Always check with your board attorney. Here are some talking points.
There are those that argue any change to the health benefits plan needs to be negotiated, whether the change enhances the benefit offering or dilutes the benefit offering. In that case, any change would not be allowed.
However, there is another school of thought that if the benefits are "better than," the group could transition since the Standalone/Copay Rx option is generally looked at as a "better than" option.
Your board attorney's interpretation of the law will be extremely important in determining your options, as well as the opinion of the local unions.
3. Elimination of all but Direct 10, Direct 15, and Educators Health Plan
This is the big one. If you're a district that negotiated the 1525 or 2030 plan as the base plan for your employees, what are you supposed to do? Guidance on this is tough, but let's review some of the key points you'll need to understand.
Effective July 1, 2020, all plans will be eliminated from the SEHBP except the Direct 10, Direct 15, and Educators Health Plan (a new plan). If your base plan is Direct 10 or Direct 15, you can skip this section.
However, if you're in the SEHBP and negotiated the 1525 or 2030 as a base plan, those will no longer be options. I do not believe this is an ETBT issue for groups in the SEHBP, since state law supersedes local contracts.
With that said, this change presents a challenge for one big reason - typically the unions have allowed the 1525 or 2030 plans to become the base plan ONLY if the CBA includes some form of Chapter 78 Relief. Maybe you've capped contributions at 26% or transitioned back to Year 3 or 2 of Chapter 78. Liberty worked on one of the first contracts to go back to Chapter 2 and 1.5% of salary just about 3 years ago.
So now, those low cost plans are no longer an option for SEHBP participants. However, S2273 does not seem to address any issue related to contributions...
If the employees would like to enroll in the Direct 10 or Direct 15, will they be allowed to do so?
If employees enroll in the Direct 10 or Direct 15, how will their contributions be calculated?
Will it be on the same reduced Chapter 78 scale they've negotiated in order to allow the base plan to become the 1525 or 2030?
Will it jump back to Year 4 of Chapter 78 for Direct 10 and Direct 15?
Will they pay their current rate then "buy up" which is industry lingo from "pay the difference" between Direct 10 and the now removed Direct 2030?
If the Direct 10 or Direct 15 had previously been eliminated as options, will everyone be forced into the new Educators Health Plan?
Of course it's obvious to the reader that using a reduced Chapter 78 schedule to contribute to the Direct 10 or Direct 15 puts the district in a financial disadvantage, which seems in direct conflict with the spirit of S2273 - which is to save money for employees and taxpayers.
If you are in a private plan outside of the SEHBP, you are allowed to keep your current plans in place - so there will be no ETBT issue if you remain outside of the SEHBP. However, if you are looking to transition back into the SEHBP, this may pose a significant ETBT issue and prevent the group from joining.
As more information about this bill comes to light, we will continue to provide some opinion pieces to help facilitate conversations with your board, your employees, your attorney, and your broker.