Plan Language Matters

A MATRIX Minute by MATRIX Group Benefits, LLC

Legislative changes, court decisions, service agreements, access contracts, and new technologies all impact the language in the Plan Document. It is the language in the Plan Document that determines what discretion a Plan Sponsor has and how a claim gets adjudicated. Plan language can limit what a Plan Sponsor can do to reduce the Plan’s financial exposure to catastrophic claim costs or it can increase the ability of the Plan Sponsor to initiate actions to reduce their financial exposure. Significant claim costs can be incurred for conditions and situations such as:

  • a)    Chronic Kidney Disease that can lead to dialysis and kidney transplants; 
  • b)   Cancer can lead to intense chemo and radiation therapy, surgery, drug therapy, stem cell, and bone marrow transplants and now cellular therapy;
  • c)    Rare conditions and congenital conditions for which may be treated by new gene therapy using new drugs that are very expensive;
  • d)   Transfers or admission to out of network facilities due to the condition of a patient or for specialty services that the out of network facility provides;
  • e)    Prescribing specialty drugs for the treatment of acute and chronic conditions.

 In situations such as these and many other large claim situations that emerge, Plan Sponsors need the ability to financially manage the cost of the incurred claim. The Plan language and the service contracts the Plan Sponsor has entered into determine the amount of discretion the Plan Sponsor will have in any given situation. Plan document provisions that have particular potential impact on what a Plan Sponsor may be able to do when faced with a catastrophic claim include:

  • a)    The requirement for pre-admission certification and the conditions/procedures that require advance review;
  • b)   Definitions for gene therapy, cellular therapy, investigative and experimental treatments or devices; primary network/in network provider and out of network provider and, wrap or secondary network, and reasonable or allowable charges;
  • c)    The manner in which out of network benefits apply to participants and when wrap or secondary networks may apply;
  • d)   The manner in which claim determinations are made and adjustments (often referred to as the order of determination) are made to the charges for eligible services; 
  • e)    Carve outs for certain services or conditions such as high cost drugs, dialysis, direct contracts for certain procedures or conditions.

 Comprehensive review of Plan Documents and all the service agreements that support it should be performed by an independent entity who specializes in employer self funded plans every few years to be sure the Plan provisions are up to date, support the objectives of the Plan Sponsor and empower the Plan Sponsor to actively manage processes to limit financial exposure when faced with catastrophic claims.

$9,000,000

A MATRIX Minute by MATRIX Group Benefits, LLC

And the charges just keep coming. What type of situation racked up $9,000,000 in charges and is continuing to? A burn victim? No. A multiple organ transplant with complications? No. Prematurity with complications? No. Neurotrauma? No. Gene therapy? No. The answer is COVID-19 – an extreme long-haul case.  

After 145 days of inpatient stays in 3 hospitals in two cities, medical air and ground transportation, too many physicians to count, ventilation, ECMO, EUA drugs, and then discharge to a LTC facility, all the providers are seeking payment. And all are out of network and no negotiations or agreements were pursued at the beginning of a transfer and new inpatient stay. In fact, all procedures for pre-cert or prior authorization, concurrent review, and medical case management were missed because no one was reporting the patient after the first discharge for the transfer to the second facility. Why all the transfers? Shortage of supplies and equipment, and no one (reportedly) tried to secure needed equipment and instead transferred the patient from facility to facility without regard to any insurance or benefit plan considerations or requirements.  

When was this situation reported? The first knowledge of this situation occurred when the third facility submitted an interim bill for over $5,000,000. Up to this time the extended hospital stay was not known. 

What would your self-funded plan do in this type of situation? Do you have the right resources available? Would you be able to navigate the impact of this type of claim with the terms of your coverage and the timing of your next renewal? Understanding how medical stop loss coverage works, what the terms of coverage and claim basis mean, and how claims impact underwriting and renewal considerations are important aspects of being the fiduciary for the self-funded plan. 

Matrix RMS worked with the employer and claim administrator to develop a plan for negotiating the facility charges, and then RMS engaged the insurer and reinsurer to get their concurrence with the plan. RMS then engaged a specialized bill review firm to analyze the itemized bill for coding and charges and assess them for R & C pricing comparison and a Medicare allowable comparison. RMS also engaged a consulting firm that specializes in provider bill negotiation to work with the claim administrator in the negotiation of the facility charges. The negotiating position was strengthened by the well crafted language in the plan document regarding adjudication of charges from out of network providers. Both engagements were arranged on a fixed fee basis. 

After almost three months from the time the first interim bill was identified, what started out as a demand for payment based on billed charges, morphed through multiple versions of discounts off billed charges, to greater discounts or a similar payment amount using a percentage of Medicare, to finally an agreement for payment based on 135% of Medicare. Throughout the process, the facility position was a percentage discount off billed charges without an audit and the plan’s position was to require a complete itemized statement before discussing possible payment terms using a percentage of Medicare. Throughout the process, the use of the facility’s own operational and financial statistics and metrics provided the information needed to refute negotiation positions the facilities presented. 

In the end, the efforts lead by RMS resulted in facility claim savings of $6,900,000. 

SURPRISE NO MORE

A MATRIX Minute by MATRIX Group Benefits, LLC

On July 1, 2021, the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury (collectively, the Departments), along with the Office of Personnel Management (OPM) released an interim final rule with comment period (IFC), entitled “Requirements Related to Surprise Billing; Part I.” This rule, related to Title I (the No Surprises Act) of Division BB of the Consolidated Appropriations Act 2021, establishes new protections from surprise billing and excessive cost-sharing for consumers receiving health care items and services. This IFC implements many of the law’s requirements for group health plans, health insurance issuers, carriers under the Federal Employees Health Benefits (FEHB) Program, health care providers and facilities, and air ambulance service providers. 

This IFC protects individuals from surprise medical bills for emergency services, air ambulance services provided by out-of-network providers, and non-emergency services provided by out-of-network providers at in-network facilities in certain circumstances. 

If a plan or coverage provides or covers any benefits for emergency services, this IFC requires emergency services to be covered:

  • Without any prior authorization (i.e., approval beforehand). 
  • Regardless of whether the provider is an in-network provider or an in-network emergency facility.
  • Regardless of any other term or condition of the plan or coverage other than the exclusion or coordination of benefits, or a permitted affiliation or waiting period. 

Emergency services include certain services in an emergency department of a hospital or an independent freestanding emergency department, as well as post-stabilization services in certain instances.

This IFC also limits cost sharing for out-of-network services subject to these protections to no higher than in-network levels, requires such cost sharing to count toward any in-network deductibles and out-of-pocket maximums, and prohibits balance billing. These limitations apply to out-of-network emergency services, air ambulance services furnished by out-of-network providers, and certain non-emergency services furnished by out-of-network providers at certain in-network facilities, including hospitals and ambulatory surgical centers.

This IFC specifies that consumer cost-sharing amounts for emergency services provided by out-of-network emergency facilities and out-of-network providers, and certain non-emergency services furnished by out-of-network providers at certain in-network facilities, must be calculated based on one of the following amounts: 

  • An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act.
  • If there is no such applicable All-Payer Model Agreement, an amount determined under a specified state law.
  • If neither of the above apply, the lesser amount of either the billed charge or the qualifying payment amount, which is generally the plan’s or issuer’s median contracted rate. 

Similarly, cost-sharing amounts for air ambulance services provided by out-of-network providers must be calculated using the lesser of the billed charge or the plan’s or issuer’s qualifying payment amount, and the cost sharing requirement must be the same as if services were provided by an in-network air ambulance provider.

Under this IFC, the total amount to be paid to the provider or facility, including any cost sharing, is based on:

  • An amount determined by an applicable All-Payer Model Agreement under section 1115A of the Social Security Act.
  • If there is no such applicable All-Payer Model Agreement, an amount determined by a specified state law.
  • If there is no such applicable All-Payer Model Agreement or specified state law, an amount agreed upon by the plan or issuer and the provider or facility.
  • If none of the three conditions above apply, an amount determined by an independent dispute resolution (IDR) entity.

Plan Sponsors and their advisors should monitor the developments of the IFC and be prepared to amend plans for the plan year beginning January 1, 2022 based on the final rules when they are released.  

WHAT’S HAPPENING WITH STOP LOSS QUOTES?

A MATRIX Minute by MATRIX Group Benefits, LLC

One thing is certain in the world of medical stop loss – nothing makes a lot of sense. From year to year, we all expect market cycles; good claim years in which insurers are profitable generally means a softer market and rates may be stable or even reduce somewhat. Conversely, when insurers incur claim losses, it generally results in a hardening of the market, and rates increase. With the new transparency regulations on hospital pricing in effect, there was some anticipation that providers would back off price increases, and insurers would be able to avoid some of the predicted rate increase trends. Unfortunately, none of that seems to be occurring.

Matrix recently quoted medical stop loss coverage for an employer sponsored plan and provided a competitive Platinum Program quote. The incumbent proposed a renewal premium increase of forty-five percent (+45%). When the competitive quotes were reviewed the incumbent revised their renewal proposal to a reduction of five percent (-5%) below the current rate. How does any underwriter explain a swing of fifty percent (50%) in their proposal? The obvious answer is rate it up and take as much as you can get until questioned and then back off.

Matrix provides consultants and plan sponsors with a choice of underwriting approaches. Platinum, a manually underwritten model designed for financial stability and predictability, and Gold, a more experience driven underwriting model that adjusts based on market and actuarial trends. Platinum provides caps on the amount of rate increase based on leveraged trend and a pooled risk for large claims. These value-added features have been in place for the entire twenty years that Matrix has been in business, and with Matrix Risk Management Services has saved plan sponsors hundreds of thousands of dollars over the years. The Gold Program does not include the value-added features but provides rate change predictability based on the premium “rate to manual” and experience loss ratios. Both programs provide highly manageable, and explainable annual rate changes. 

Current reports indicate the trends for the next twelve months are for increases in premium rates and claim costs. The trends are the result of claim losses, provider increases in pricing, approval of new orphan, biologic, and specialty drugs, new medical technology and procedures including expanded use of AI and robotics, and the unknowns associated with COVID-19. As plan sponsors anticipate the next renewal of their medical stop loss coverage, they should spend time reviewing their claim experience for the past thirty-six (36) months, current plan year large and emerging claims, the impact of provider-payer networks, and the structure of their medical stop loss contract to identify strategies to consider for their renewal. This renewal cycle is a good time to comprehensively review your plan in its entirety and identify cost management strategies you could adopt and implement for the new plan year. 

MATRIX Celebrates 20 Years

A MATRIX Minute by MATRIX Group Benefits, LLC

It was the year 2000 when the foundation for Matrix Group Benefits, LLC was first discussed with the head of underwriting for Canada Life. The hysteria of Y2K had come and gone, and everyone knew that business life and its reliance on computers and the internet would continue and would increase in the future. This realization made the formation of MATRIX feasible as we launched the company in February 2001 with one person in Maine, one in Arizona, a service agreement with a company in Indiana and our consulting underwriting expert in Canada. When we initially discussed how we could make this remote business network model work, most people questioned its efficacy. Fast forward to today and most companies have remote locations all over the world and millions of people work from home.

As the MGU took form and secured its MGU agreement and first Treaty in 2001, the first cases began to be written. Many of the early cases were the result of established relationships with consultants and services provided to plan sponsors prior to the formation of MATRIX. Many of those relationships and clients continue today, twenty or more years after their inception. As the MGU started to grow, Matrix Risk Management Services LLC (RMS) was launched based on the Utilization Management and PPO models and processes that we used in prior roles managing utilization review programs and provider networks. The fundamental principles of early identification and intervention still guide the services provided to plan sponsors by RMS.

As MATRIX developed, U.S. Group and Pension, LLC (U.S.G&P) was added to serve as a general agency for the marketing of medical stop loss and other products and services. Today U.S.G&P continues to provide marketing and sales support for MATRIX.

Over the course of the past twenty years, MATRIX has been, and continues to be, a niche market leader providing unique underwriting programs and an early adopter of many approaches for claim cost management. Our PLATINUM program, introduced when MATRIX was formed, still serves as our core stop loss program. Platinum is designed on the principles of financial stability and leveraged trend and selection of coverage options by the plan sponsor. The combination of leveraged trend with established rate increase caps provided, to the best of our knowledge, the first product with a rate cap option. Platinum has also since its inception included a unique approach to risk sharing for lasers for known ongoing large claims. This unique approach continues today and is again, to the best of our knowledge, the only model of its type.

The MATRIX approach to medical stop loss was also concerned about the inherent risk of conflict between claims and underwriting, also known as underwriting at the point of claim. To assure objectivity in claim review and to separate claims from underwriting, Matrix outsourced the claim analysis function to an independent claim auditing firm, and also engages the services of independent review firms when a claim involves technical or complex medical questions. The objectivity and transparency of the independent claim review eliminates virtually all questions about claim decisions and has enabled MATRIX to approve plan sponsor’s requests for reimbursement when the initial review of a claim made it appear that it may be considered ineligible.

Our RMS service has continued to expand its expertise and relationships with specialty resource companies to support our clients and consultants. The collaboration with vendors and networks contracted by plan sponsors and with their benefit administration staff members has resulted in more than just cost savings for the plan, it has helped plan participants navigate their way through the healthcare delivery system. Today RMS is focused on many of the new emerging therapies, procedures and drugs and expanding its resources to help clients and consultants adopt strategies to manage the impacts and financial risks these advancements represent.

We celebrate twenty years this month thanks to our staff, our colleagues, consultants, clients and medical stop loss insurers. We look forward to serving you for many more years.

Risk Reduction

A MATRIX Minute by MATRIX Group Benefits, LLC

Medical research continues to develop and bring to market new diagnostic methods, treatments, and drugs, all of which can cure patients with unique or dread diseases. The newest advances are occurring in genomic testing for the identification of personalized drug therapies for treating cancers and in gene and cellular therapy for treatment and curing rare genetic conditions and diseases. The pipeline for new methods, treatments, and drugs to be approved by the FDA during 2021 is increasing by the week and all of these research developments come with a substantial price. It is the cost for these new advances that pose the greatest threat to an employer’s self-insured plan.

New orphan drugs for the treatment of rare diseases and congenital conditions have costs beginning around $500,000 and the newest ones for gene therapy have costs ranges of $2,000,000 to $3,000,000. While it is true that plans have medical stop loss coverage that is unlimited per claim, the timing of a patient diagnosis, treatment plan and episodes of care and ongoing treatment could result in medical stop loss having very undesirable qualifications and significant cost increases. For many plans, the best solution for managing the financial risks posed by these medical advancements is to amend their plan to exclude gene and cellular therapy. Very large employers who do not want to exclude these therapies from their coverage may look toward the contracting strategy CMS has taken with the drug manufacturers to have an independent clinical review of the results of the drug/therapy several months after completion of the therapy. If successful, the plan pays a contracted amount over a couple of years, and if the therapy was not successful then the plan would not be obligated to pay the manufacturer. For employers that would like to explore other options, Matrix RMS has a relationship with Emerging Therapy Solutions (ETC) who has established contracts with the few facilities approved to provide these therapy services and the drug manufacturers. 

Organ transplant costs have increased significantly over the past five years and more facilities are performing transplants today than in prior years. More facilities do not necessarily equate to better outcomes or reduced cost. Transplant networks contract with centers based on the types of transplants performed, the number of procedures done, mortality and readmission rates, support services and contract value. Independent transplant networks are very transparent, easily contracted on a per patient basis, and easily included in the plan document and patient ID card.

Cancer is the elephant in the room. The incidence of new cancer diagnosis across all age and ethnic groups is predicted to be greater in 2021 than in any prior year. When the frequency of misdiagnosis exceeds 20%, the need for an oversight resource, beyond the scope of the pre-cert service, becomes evident. Hospitals treating cancer patients have increased similar to transplant centers but are they clinically the best site for the patients? Like transplants, cancer centers are evaluated based on the types of cancer treated across all ages and ethnic groups, the types of therapies/modalities performed, mortality and readmission rates, and contract value. Engaging a specialty resource service to provide oversight for cancer claims from the point of initial diagnosis through the completion of treatment is easily accomplished by a plan amendment.

What’s Next in Stop Loss Markets?

A MATRIX Minute by MATRIX Group Benefits, LLC

The first half of 2020 has been a continuous series of unexpected surprises. New specialty drugs, new cellular and gene therapy, new transplant procedures, increased provider charges and decreased contractual adjustments, expanded use of Artificial Intelligence and robotics, virtual physician visits, and Covid-19 highlight the first half of the year. Virologists developed at least one new gene therapy in FDA review. Look for more advances using non-harmful viruses in the future. These changes, coupled with the temporary closures of elective and non-emergency hospital admissions and outpatient procedures, deferral of medical visits and treatment, and the resultant changes in claim patterns have disrupted stop loss markets and ushered in a new period of financial anxiety within the industry.


Concerns about extreme costs associated with new specialty, biologic and orphan drugs, and cellular and gene therapy, raise issues of affordability for self funded plans and reinsurers. Unlike other medical insurance products, stop loss insurance does not have additional streams of income to support it. Large ASO insurers and first dollar insurers create additional income through administrative services, owning provider networks, providing PBM medical management and telehealth services, and selling ancillary insurance services. These additional revenue streams also help ASO insurers adjust rates by line of coverage to increase the attractiveness of proposals. Stop loss insurers and reinsurers do not have such additional lines of coverage.


As stop loss markets analyze the potential financial impacts that will result from the lag in medical care caused by the COVID-19 pandemic, the costs of the new drugs and medical procedures, and contract changes by providers during the first six months of 2020, we can anticipate that stop loss premium rates and perhaps some policy terms with be affected.


For plan sponsors, the time is now to begin evaluating what changes in benefit coverage can be considered. Should alternative provider networks be explored? Should a change in the approach for coverage for out of network providers be considered? Should different coverage for extraordinary drug expenses be considered? Should new limitations for extraordinary medical procedures be investigated? Should specialty/direct contracts for certain types of medical care/procedures be explored? 


Plan sponsors should be proactive in their evaluation of options to protect against surprises from the stop loss market at the time of renewal. Waiting until markets react puts plan sponsors in the unenviable position of having to make quick decisions with limited options.


Uncertainty impacts every facet of business. The stop loss industry and employer self funded benefit plans are not immune to the environmental changes taking place. Taking the time now to devote to risk assessment and planning will provide dividends during the renewal process.

Unintended Consequences

A MATRIX Minute by MATRIX Group Benefits, LLC

As an employer plan sponsor, you try to do everything right to provide the best benefit program at a cost that you (the employer) can afford and that you can make affordable for your employees. You hire an experienced benefit advisor/consultant. You have the advisor do a Request for Proposal (RFP) for TPA services, a comprehensive medical management company, a quality provider network, a reputable PBM service, a quality medical stop loss provider, and quality resource support programs/companies.

After the advisor evaluates the RFP responses and proposals, you consider all the variables and make the best choices for your company. The selected companies provide you with their “standard form” contracts and everyone tells you the documents are pretty straightforward and nothing unusual. Often the standard contract from a selected company has attachments, exhibits, sub-agreements, joinder agreements or access agreements which are described as agreements the company selected to perform certain services so they can work with other resources on your behalf to help manage claims. These supplemental agreements are not the agreement that the selected company has with the resource company – you the employer do not get to see those, but they are what binds you. You also do not get to see any of the financial arrangements between the two companies – financial arrangements that can cost you considerable sums of money, in the name of large claim management.

How can agreements meant to save you money, and cost you money? The best intentions often result in unintended consequences. For example, provisions in the Plan Document may create an order of processes that result in determining a claim payment amount that is considerably greater than had the claim been processed using another method. Such provisions can transform an out-of-network claim to one that is paid as an in-network claim. In other situations, such provisions can engage one of the supplemental contractors who are compensated on a percentage of the savings they provide. Sounds great – save the employer money and get paid out of the savings. Knowing how such programs work, and understanding there usually are not sliding scales or caps on fees unless you the employer negotiate those provisions, can result in significant fees being avoided by the plan. These fee amounts may significantly reduce the real savings the benefit plan and the plan participants realize. Other situations that can cost the employer occur when more than one resource company is engaged but there are no savings and the service provider still has a fee that someone has to pay. That someone generally ends up being the employer.

Specialty resource services can provide significant value to employer plan sponsors. In order to realize the value and get maximum savings, employers must take an active role in reviewing resource service agreements and negotiating their terms. Passively accepting what a contracted service provider attaches to their service agreement for you to sign or initial as part of their service agreement may result in unintended consequences for the employer, particularly when the employer realizes those agreements are subject to state contract law not ERISA.

Use the RFP process to your advantage, including interviews and onsite visits, requiring all responses in the proposal be made part of the final service agreement, checking references, and performing legal review of all documents and agreements that will be related to the services to be performed by the selected company. Use these processes to be sure you get all the information you need to make the best decisions for your benefit plan.

Workers Comp or Benefit Plan

A MATRIX Minute by MATRIX Group Benefits, LLC

Employer sponsored benefit plans typically include exclusions for injury or illness arising outside of employment. Typically, workers compensation claims are filed when an employee suffers an accidental injury while performing their job or develops an injury or illness over time due to some type of repetitive activity or frequent exposure.

As we have been dealing with the novel coronavirus causing COVID-19, many industries have been deemed essential and their employees have continued to work. Essential businesses include healthcare organizations, safety organization and first responders, food and grocery businesses, vehicle repair companies, and many types of manufacturing companies, to name a few. All of these businesses and their employees incurred greater risk of exposure to COVID-19, and many had, and may continue to have, employees test positive for the virus. 


Under the Executive Orders and new laws passed by Congress, certain medical testing and telehealth services are required to be covered without cost to covered persons. These services are clearly meant to be a covered healthcare service that is covered by an employer’s benefit plan. But what happens if an employee working in an essential job in an essential business tests positive for the virus and requires medical care, including hospitalization? In these situations, employer plan sponsors should direct their contracted claim administrator to contact the employer to research how the employee may have become infected – such as verifying the employee had been working, inquiring if the employee had traveled recently, or had been exposed to someone who was sick or an individual who was positive for the virus in order to make a claim determination. If the employee is considered to have contracted the virus through an exposure related to working for the employer, a claim determination should be based on the plan’s exclusion of an injury or illness arising out of employment. The employer should then file a claim with the workers compensation program for the medical expenses related to the treatment for COVID-19.


If the employer plan sponsor has an occupational health department or program, or contracts with an occupational health program, the occupational health professionals can facilitate the research of how the employee likely contracted COVID-19 and provide a resource for the employer and the contracted claim administrator for the benefit plan. Employers and their claim administrators may also consider checking for any Bulletins issued by their State Insurance Department or an Executive Orders signed by their governors related to workers compensation claims related to COVID-19

Site of Service Matters

A MATRIX Minute from MATRIX Group Benefits, LLC

Many of us lose sight of where various medical services are performed. As hospital corporations have increased their footprint in physician services by acquiring physician practices and employing physicians in office settings throughout the community, more outpatient procedures are being performed in hospital settings than in free-standing independent ambulatory settings. Diagnostic procedures and surgeries that can be performed in a non-hospital setting are generally referred to and scheduled at the outpatient departments of a hospital. Even routine lab work is typically drawn in the physician office and sent to the hospital’s lab rather than a reference lab.

As provider networks narrow the number of providers a consumer can choose from, a patient has fewer options when deciding where to go for medical care, and also needs to better understand how benefit coverage may change based on the service provider. Understanding the difference in cost between a provider in the narrow provider-owned network versus one outside of the network, and the cost difference between a service performed in a hospital setting verses an ambulatory free-standing center, directly affects the cost borne by a benefit plan.

Site of service does matter in many ways. Generally, a diagnostic or treatment procedure that is performed in a free-standing outpatient center will cost less than the same procedure performed in an outpatient hospital setting. Diagnostic colonoscopy, surgery, and infusion therapies are good examples of procedures where the charge is typically more than double in the hospital than in the free-standing center.

Dispensing and administration of prescription drugs is another example of a service that can be considerably more expensive when done in an outpatient hospital setting than a free-standing center. Not only is the provider charge typically much less, the patient may be able to acquire the drug and have it delivered to the provider which can reduce the cost of the drug since the cost is not affected by provider’s mark up. Typically the plan sponsor’s contract with a Pharmacy Benefit Manager (PBM) requires a provision for Site of Service Management for a patient to get assistance with purchase of a drug that has to be delivered to a physician.

How and where medical care is delivered affects plan costs. As healthcare corporation systems continue to consolidate and control the provider sub-systems of physician and outpatient services, and as they expand into some form of risk-bearing health plans that control the direction of patients to its provider-owned services, understanding the dynamics of site of service will help plan sponsors position their plan design to help control plan costs.