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The Phia Group, LLC

Quarterly Newsletter
Second Quarter 2015
In This Issue
The Book of Russo:
From the Desk of the CEO


The past few months have brought so much intrigue to our industry.  Everywhere you looked, something or someone was affecting health care and the insurance industry as a whole.  We saw the Supreme Court make a few monumental decisions that will affect how plans are written in the future and the viability of the ACA.  We saw interesting court cases placing more potential fiduciary risks upon brokers and administrators.  We watched and reacted as more states attempted to limit the ability for smaller employers to self fund their benefits through the use of stop loss coverage and last, but certainly not least, we have seen a monumental increase in the DOL audits to our clients and the industry at large.  If there ever was a time that The Phia Group's services were needed, this is it!


There is no question that health claims costs continue to skyrocket and the use of so called wrap discounts on many of these claims isn't helping to reduce the burden.  If you are looking for some innovative options to stand out from the pack, please contact me as there are so many great ways to truly make a powerful impact on behalf of your employer plans.  We can save you and your plans significant claim dollars, you just need to strategize and identify your major pain points. 


The next quarter will continue to be eventful so while you enjoy your summer weather, please be sure to let us know if you need some assistance - we are here for you.  Happy reading.

For All Your Consulting Needs

Through, we present a dedicated consulting inbox for all our clients' self-funding needs. Whether you have a stop-loss denial, a service agreement in need of review, a dispute with a network, a claim that may be payable but you aren't sure, a compliance question, a new group that would benefit from an SPD assessment or redline, or anything else relevant to the industry, The Phia Group is here to help.

Our consulting division - aptly named Phia Group Consulting - handles hundreds of consulting inquiries a week. They come from all different entities, including TPAs, groups, brokers, unions, MEWAs, reinsurers, MGUs, and more, and range in topic from ACA compliance to stop-loss exclusion issues, to disputes with providers and networks, to fiduciary responsibility issues, to how to best structure a claims payment bank account, to reviews or revisions of an Administrative Service Agreement, to proper HIPAA disclosures - and everything in between.


Notably, we also offer a service known as "ICE" - short for Independent Claim Evaluator. Through this service, The Phia Group provides consulting guidance regarding the treatment of specific claims that have been incurred but not yet adjudicated. We combine our wealth of knowledge of the industry and best practices with an intimate understanding of plan documents, networks, and applicable law to create an unprecedented resource that can be tapped when a TPA or plan is unsure of how to treat a given claim.

We like to think of ourselves as a one-stop shop for all entities in the self-funding industry. To step into our shop, please don't hesitate to email us at

Letter from the Editor

We hope you all had a nice Fourth of July. The second quarter of 2015 has been a great one here at The Phia Group, and we have our clients and partners to thank for that. This past quarter has seen The Phia Group unveil and continue to refine our lines of business; thanks to your help, our Claim Negotiation & Sign-Off service has progressed past the "beta" stage but is still improving all the time, our Phia Document Management online plan-drafting software has continued to be a smash hit, and, as always, our claim recovery services are constantly improved and perfected.


We are working on unveiling some new developments in our service offerings, and we are excited to see what the third quarter will bring. This installment contains some interesting judicial and regulatory guidance, some articles from our very own CEO, Adam Russo, and other members of our legal department, and commentary about the industry as a whole.


Thanks for tuning in to our quarterly newsletter, and as always, thanks for continuing to "Learn with Us, Plan with Us, and Save with Us.

Stop the Presses 


Breaking News: Obergefell v. Hodges


Unless you've been in a coma for the last couple of weeks (and apologies to those of you who have), you've heard that the United States Supreme Court released its opinion in this case which interprets the Fourteenth Amendment to the United States Constitution as providing the same protections of same-sex marriage as it does for opposite-sex marriage. There's a great deal of controversy over this decision, but one thing is for sure: it will impact employee benefit plans that currently provide different eligibility to same-sex spouses than they do for opposite-sex spouses. A brief primer is that while this will directly apply to public-sector plan sponsors, it is currently unclear exactly how this will apply to private-sector plan sponsors - but we do expect that private-sector plan sponsors will still face certain challenges if they differentiate between same- or opposite-sex spouses such as allegations of sex discrimination under Title VII of the Equal Rights Act of 1964. 


Please feel free to contact us if you've got more specific questions about how this case may impact you or your clients.


Johnson & Towers, Inc. v. Corporate Synergies Group, LLC


This recent case underscores the ever-increasing standard to which brokers are held with respect to self-funded plans. In this suit brought by a health plan sponsor against its broker, the plan alleged that the broker, in securing a replacement stop-loss policy for the group, failed to procure adequate stop-loss coverage because the new policy did not mirror the terms of the Plan Document - specifically a "widowed spouse" amendment to the plan document. The stop-loss policy did not cover widowed spouses, but the Plan did, and the plan incurred expenses as a result of this amendment that the stop-loss carrier was not required to reimburse.


Safeguarding plan assets is not just for plans anymore; TPAs, brokers, and other vendors are tasked with protecting the plan and its money, and even the smallest neglected detail can have dire consequences, and this case is a great example of that.


Our advice to TPAs and brokers alike is to be careful. You can never have too much protection; although in this case the broker secured an inadequate stop-loss policy, the majority of fiduciary claims we see have to do with improper plan payments or denials, and this is a friendly reminder to Mind The Gap - and Be Gap-Free™ by performing a Gap-Free Analysis to compare your current SPD and any proposed or in-force stop-loss policy, as well as take whatever steps possible to rid yourself of troublesome fiduciary duties. In the current industry and legal climate, plan administrators, brokers, and TPAs are always looking for ways to minimize their fiduciary liability...and for good reason.


If you or a client need help understanding what the law requires, please don't hesitate to contact us.




Unfortunately for both you and us, it is currently the off-season for our free monthly webinars. We enjoy presenting them as much as you enjoy watching them, but we must take a break for the season. We'll be back in September...stay tuned for your invitation.


We're On the Road Again: 2015 Upcoming Presentations in the 3rd Quarter

  • July 29 - Adam Russo speaking at Employee Benefit Management Services: Billings, MO
  • September 10 - Ron Peck speaking at Custom Design Benefits: Cincinnati, OH
  • September 10 - Adam Russo speaking at HealthFirst TPA: Tyler, Texas
  • September 14 - Adam Russo speaking at Texas Association of Benefit Administrators: Dallas, TX
  • September 15 - Adam Russo speaking at Diversified Administration Services: Mohegan Sun, Uncasville, CT 

From the Blogosphere  

  • 3 Possible Outcomes for the Cadillac Tax and How to Prepare for Them. Even though its effective date is still a long way away, TPAs and brokers are beginning to be asked questions about the Affordable Care Act's so-called "Cadillac Tax," which is slated to have drastic consequences to some health plans come 2018. In classic ACA fashion, the fate of the tax is still up in the air.

  • Data Shows Large Rise in List Prices at Hospitals. This is an article that needs no introduction. Rising facility bills are a problem for the entire economy, no less our industry, yet providers - and, even worse, lawmakers - seem to view it as a non-issue.

  • Texas Prompt Pay Law Not Preempted. Many of us have been conditioned to wince upon just hearing the name "MedAssets." A recent federal district court decision has made it easier for Texas providers to enforce the state's arguably inane idea of prompt payment by holding that the infamous Texas prompt pay law is not preempted by ERISA.

  • Are Smaller Companies Poised to Self-Fund Health Care? We always love articles that talk about the growth of self-funding. We know our industry is constantly evolving; one of the primary changes happening in recent years is the size of the average self-funded group, which is getting smaller and smaller.

Visit our blog to read more recent industry news.
Service Focus of the Quarter: CNS

The Phia Group's Claim Negotiation & Sign-Off ("CNS") service has blossomed into a force to be reckoned with. Boasting a team of seasoned negotiators, skilled attorneys, and efficient support staff, The Phia Group has been immensely successful in negotiating both in-network and out-of-network claims for its clients, netting unprecedented savings that ordinarily might not be realized at all.

We have dedicated a large proportion of our resources to developing and perfecting CNS, and our hard work really pays off when a client experience up to 94% savings, our current record, on a given claim. We always welcome feedback from our CNS clients, and their continued help has enabled us to make this service an essential tool for many TPAs.

When it comes to Empowering Plans, of all our services, CNS provides the most tangible results in the form of enormous savings and provider sign-off. If you haven't already, we urge you to try it out.

For more information about our Claim Negotiation & Sign-Off service, please contact Jason Davis at

Case Studies


Claim Negotiation & Sign-Off


The Phia Group's client referred two out-of-network claims, for the same patient and provider, totaling approximately $77,000. The provider was one which had historically never offered the TPA's former negotiation vendor a reduction higher than 14%.


Once the referral was received, The Phia Group performed a preliminary review of the claims and called the provider to engage it in a dialogue. The provider, as is the case with many, initially told us that it was not interested in negotiating at all, but we obtained a fax number for the provider nonetheless. The provider was not interested in discussing the particulars over the phone.


A member of The Phia Group's negotiation team sent a very strongly-worded correspondence that unpacked benchmarks on the claims, explained some coding considerations, and detailed legal and financial reasons why a settlement was in the provider's best interests.


Upon receipt of this letter, the provider promptly executed the agreement to accept $17,500 as full and final payment from the health plan, resulting in savings of nearly $50,000. As with all of The Phia Group's claim negotiations, the provider agreed not to balance-bill the patient for the remainder.

Billed:         $77,000
Paid:           $17,500
Savings:     $59,500


Independent Claim Evaluation


A TPA engaged The Phia Group to help analyze an appeal filed by a large law firm representing a comparably large provider system in Texas. The claim had originally been denied in its entirety due to a determination that the patient had been engaged in an illegal act which resulted in the injuries sustained; this denial was supported by Plan language to the effect of excluding injuries resulting from "serious illegal acts," but the Plan did not elaborate on the term.


After the Plan Administrator's denial of the claim and the denial of the first internal appeal, the provider requested all documentation related to the claim itself, as well as summaries of past determinations made by the Plan Administrator that relied on the same "serious illegal acts" exclusion.


The TPA provided the requested information, including a summary of a few-year-old claim in which this same exclusion was applied to exclude an injury stemming from a near-identical series of events. That appeal, however, was overturned after the attorney appealed and cited binding law to argue that driving while intoxicated is not "serious" as far as illegal acts go. The result was that the Plan Administrator overturned its initial appeal, and did not ultimately consider driving while intoxicated to be a "serious illegal act" in that previous case.


The attorney in this case filed its second internal appeal, citing DOL regulations stating that the Plan Administrator is bound to interpret the same provision in the same way among similarly-situated individuals. The Phia Group was asked to provide its consulting opinion to the group and TPA regarding this appeal; our opinion, after a careful analysis of the facts and the law, was that it seemed that the attorney was actually absolutely correct in this case. The TPA thanked us for our opinion, but the group's counsel discounted it and advised the group to continue to deny the claim, based strictly on Plan language and not taking into account the applicable regulatory guidance from the DOL.


The TPA and Plan Administrator were subsequently engaged in binding arbitration over the second appeal denial, and the arbitrator rendered a determination that was near identical to The Phia Group's previous consulting opinion.


Not only was the Plan required to pay the medical claims, but the provider was also awarded attorney's fees and interest on this five-year-old claim, totaling almost $100,000 in addition to the amount of the claim payment.


The Stacks  


Be Smart When Self-Funding

By Adam V. Russo, Esq.

(As published in Thompson Information Services' Employer's Guide to Self-Insuring Health Benefits)

While we are seeing record growth across the country, self-funding is a topic that few are familiar with, even though many participate in self-funded plans. It is an ever-growing trend in the industry, yet it is still largely a mystery to many.  The problem is that many plans that do self-fund aren't very smart about it.  As most of you know, self-funding is a type of health benefits coverage whereby the employee pays a contribution to the employer - generally out of his or her paycheck - and the employer keeps the contribution amount as part of the employer's assets and, in turn, provides the employee and any eligible dependents, with certain health benefits coverage . The employer pays for eligible health claims out of its own pool of assets.  As readers of this article know, we here at The Phia Group have been self-funded for years.


In self-funding, the employer retains all risk and can purchase stop-loss insurance to  mitigate the ever present risk. As I love to preach as often as I can, self-funding lets the employer customize the benefits it provides and offer a broad framework of benefits to better its business and the quality of its employees' lives.

Click here to read the rest of this article...


Ready or Not, Here it Comes!  The Employer Mandate is Finally Applicable

By Kelly E. Dempsey, Esq.

(As published within The Self-Insurer)


The Employer Shared Responsibility provision of the Patient Protection and Affordable Care Act ("ACA") went into effect for certain applicable large employers on January 1, 2015.[1]  The Employer Shared Responsibility provision is often referred to as Pay or Play, the Employer Mandate, or 4980H subsections (a) and (b).  The applicability date of the Employer Shared Responsibility provision ("Employer Mandate") depends on an employer's size, as well as, whether or not the plan is a non-calendar year plan and meets the non-calendar year plan transition relief (provided by the final regulations issue on February 12, 2014).[2]  As of January 1, 2015, the Employer Mandate is applicable to employers with one hundred or more full-time employees including full-time equivalents.  Transition relief for certain smaller employers expires for 2016. Therefore, as of January 1, 2016, the Employer Mandate is applicable to employers with 50 or more-full time employees including full-time equivalents.  It's important to note that the size of the employer is based on actual employees, and not based on the number of employees enrolled in the employer's health plan.  The Employer Mandate is in effect for applicable large employers regardless of whether or not the employer's plan is grandfathered or non-grandfathered.


Click here to read the rest of this article...

 Size Doesn't Matter But the Regulators Do

By Adam V. Russo, Esq.

(As published in Thompson Information Services' Employer's Guide to Self-Insuring Health Benefits)

What is the perfect size for a self-funded plan?  This is one of my favorite questions and I love to ask it at any conference at which I happen to have the pleasure of attending and speaking.


The answers I receive are pretty funny and actually typical, ranging anywhere from 200 lives to 1,000,000.  Yes, somebody actually stated that the perfect self-funded plan size is 1,000,000 lives.  I almost passed out when he said this as I realized right away that this gentleman is a broker and has clients who place their trust in him.  I started praying for those clients right after that session!  The right answer is surprising to most as it potentially can be just one person.  A self-employed person who happens to have a lot of money and is in great health could easily be self-insured.  It really isn't the size that matters at all; it is the behavior of the employee population.  That one person can walk into any medical facility and negotiate his or her own bills.  We all know that cash is king!


Think this through...which is the better plan to self-fund?  (This is just a hypothetical, so please do not get upset at this example - I have plenty of friends and family who drive trucks for a living!)  The first plan is the 5,000 employee plan of truck drivers where the average employee is 75-lbs overweight.  The employee population has a major drug addiction issue, loves to drink, smoke, and do some very dangerous activities outside the workplace.  Or would you believe that the plan with 30 yoga instructors who don't drink, don't smoke, don't do drugs, are in better shape than anyone could possibly be in and just overall make everyone else in the country look out of shape?  Who do you think is the better risk for self-funding their benefit plan?  If you are the stop-loss carrier, who would you rather insure?  Exactly.  The size of the employer doesn't always matter.  The plan demographics, the plan language, the claims data, and potentially the wellness programs are what matter the most.


The Road to Recovery:
Subrogation Gets Its Day In Court ... Again
By Christopher M. Aguiar, Esq.
(As published within The Self-Insurer)

In a country with a seemingly infinite amount of regulation and concerns regarding benefit plan compliance following the passage of the Affordable Care Act in 2010, one would expect much attention from courts in the employee sponsored health benefits arena. Most might be surprised when they realize the amount of attention that subrogation has received in The Supreme Court of the United States, the highest court in the land, over the last 25 years. Subrogation, a concept few truly understand and even fewer recognize, has been reviewed by The Supreme Court several times since 1990. Even legal practitioners unfamiliar with the world of insurance law might struggle to provide a satisfactory explanation of it. Many an industry practitioner can tell tales of their encounters with even subrogation professionals with questionable understanding of the concept.

In the 226 years of The Supreme Court's existence, It has reviewed approximately 1,742 cases, or eight cases per year. Most courts in America review more than that per day. With such limited volume, it is surprising that the issue of subrogation has been directly dealt with four times since 1993 (i.e. 4 of the last 469 cases). While two applications for review have been denied, a fifth case, Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, case # 14-723, is now slated to be heard by The Supreme Court in 2015.

Click here to read the rest of this article...


The Problem with Wraps

By Adam V. Russo, Esq.

(As published in Thompson Information Services' Employer's Guide to Self-Insuring Health Benefits)


If you are a long time reader of mine, I would first like to say thank you for being the only person other than my mother to read what I write.  It is extremely kind of you to do so!  As a loyal reader, you would also know that it doesn't take a lot to get me going and in the self insured industry it seems like something new happens on a weekly basis that gets my water boiling.  For the past few years, amongst the threat of the exchanges and the state regulation of stop loss, nothing has bothered me as much as the wraps!  Wrap networks that is.  If PPO networks weren't bad enough, in case you have a claim that doesn't belong to a network, you can always pay the claim through the wrap network.   So if one network wasn't enough, with a wrap you can even work with more.


What we have is an industry phenomenon.  TPAs and self funded plans complain about their networks all the time.  How the discounts are bad, how you don't have the ability to audit the claims, how the networks really work on behalf of the hospitals and not the plans. Everyone seemed to complain about them yet need them to attract clients that aren't willing to go the reference based pricing route.  You need a network to survive as I am told by every executive that has been in the industry longer than I have been alive. 


Yet at the same time, these professionals long for the day when they see a large claim and have the ability to fight the facility about the excess charges, save their clients money, look like a hero to the broker, have the stop loss carrier thank them, and make the TPA some extra revenue from the savings they found.  The problem is they have this option right now and it's called the out of network or wrap network claim.  Every day I see TPAs and self funded employee benefit plan throw good money down the proverbial toilet.



Cost containment: The Golden Oldies

By Andrew R. Silverio, Esq. 
(As published within ECI Users Group Spring Newsletter)


It's no secret that America devotes more of its gross domestic product to healthcare expenses than any other country.  Runners up, including Canada, the Netherlands, France, Germany, and Switzerland, don't even come close.  There are many reasons we spend so much on healthcare; the blame can be properly distributed among many parties and over many decades, and it is hardly worth even getting into such a discussion in such a brief article.  To such a complicated problem, it is of course no surprise that there is no silver bullet solution.  However, from the perspective of health plans, there are several methods which have emerged over the years as successful ways to minimize costs.


Click here to read the rest of this article...

To stay up to date on other industry news, please visit our blog.
Get to Know Our
of the Quarter:

Jennifer Costa

jen costaPatients have commented that Jennifer has be a true professional, providing needed information and assistance in a very friendly and proactive manner. The thing that separates Jennifer, however, is the empathy and concern she provides, where none is expected or required - and Jennifer's colleagues know that "Jennifer Costa epitomizes a true Phia Employee. She goes above and beyond everyday for her team and for the Company. She is one of the most dedicated people working here and her professionalism should be a model for all Phia employees. I am proud to call her a member of my team and our company is truly fortunate to have her as an employee."


Thanks, Jen.

Phia News


New Faces at Phia

  • James Newell Jr.
    • Hired April 20, 2015 into the Claim & Case Support department
  • Wayne Andrews 
    • Hired May 11, 2015 into the Claim & Case Support department
  • Mia Shabazz 
    • Hired June 1, 2015 into the Case Investigation department
  • Brigid Bowser
    • Hired 06/01/2015 into the Phia Group Consulting department

Movers & Shakers

  • Jason Kemp earned his paralegal certificate
  • Amanda Grogan is now a Claim Recovery Specialist IV, handling bodily injury cases
  • Jason Kemp and Kerri Sherman are now Senior Claim Recovery Specialists 
  • Tumi Gugushe moved from the Consulting department to the Case Identification department
  • Derrick Mish moved from the Claims Support department to the Claims Analysis department
  • Danielle Bates moved from the Case Investigation department to the Customer Service department
Additions to the "Phamily"


Jillian McCallum's baby, Owen, was born Friday, April 24, 2015.






Tara Trojano's baby, Grace, was born Wednesday, July 1, 2015.


The 2015 Charity is ...


The Komen Promise - To save lives and end breast cancer forever by empowering people, ensuring quality care, and energizing science to find the cures.



On September 25, 2015, The Phia Group's Boston-area staff will be helping to set up for Komen's Race for the Cure, which takes place on September 27th at Carson Beach in South Boston. The Phia Group thanks the Massachusetts affiliate of Susan Komen for its service and the dedication that it shows.


For more information or to get involved, visit

Thank you for your support of

The Phia Group as we continue

"Empowering Plans."