Spotlight Interview: Christine Cooper, CEO, and Jack Towarnicky, ERISA Counsel, aequum, LLC

About Christine Cooper

Email [email protected]

A patent lawyer recruited to Koehler Fitzgerald LLC in 2016 because of her large law firm experience and IT skills, Christine was quickly elevated to a member of Koehler Fitzgerald LLC and leads the health care practice. Christine is the CEO of aequum and is dedicated to assisting and defending plans and patients.

About Jack Towarnicky

Email: [email protected]

As an ERISA/Employee Benefits compliance and planning attorney, Jack has over forty years of experience in human resources and plan sponsor leadership roles. This includes twenty-five years as the leader of a Fortune 100 corporation’s benefits function. While serving in those roles, Jack and his team won a multitude of individual, team and corporate recognitions. In 2020 Jack joined aequum and provides plan drafting and compliance services to employers and plan sponsors.

About aequum, LLC

aequum has a team of associates focused on coordinating our advocacy services with our partners, their clients and the members and dependents of the plans. aequum, through its relationship with Koehler Fitzgerald LLC, has a team of highly rated trial and appellate lawyers built for protecting our partners and clients against unreasonable medical charges, balance billing and overpayment. aequum is supported by a proprietary, customized and fully relational database that integrates with document automation, contacts and calendaring software, allowing our team to efficiently manage claims and generate accurate and timely notices, correspondence, reports and, in the case of litigation, pleadings and discovery requests.

Medical Travel & Digital Health News (MTDHN): aequum has such a strong value proposition.  Please share with our readers a brief overview of the company and your role?

Christine Cooper (CC): aequum provides advocacy services that are designed to protect plan participants with self-funded health plans from balance billing and provides a competitive advantage through cost savings to the employers of those self-funded health plans. We also serve employers who are looking to move into the self-funded space.

Typically, we partner with third-party administrators (TPAs), medical cost management companies, stop-loss carriers and employer-sponsored health plans. aequum is the sister company to Koehler Fitzgerald LLC, a law firm that has a practice focused on representing plan participants across the nation. We defend the balance bills arising out-of-network and reference-based pricing plans.

I am the CEO of aequum and a co-managing member of Koehler Fitzgerald. My partner, Jack Towarnicky, is a member of aequum and an attorney at Koehler Fitzgerald. He provides guidance to our partners on various aspects of employee benefits. We have a team of amazing people that work seamlessly together, as well as with the plan participants and our partners, the TPA and cost management companies, stop-loss carriers and employers.

MTDHN: How many plan members have used your advocacy services to date? Also, do you have an estimate of how much money you’ve saved your clients?

CC: We’ve represented over 4,500 patients, handling almost 9,000 claims, and have worked with over 325 health plans. We have saved patients and plans in excess of $31 million off the disputed charges since mid-2015. The disputed charges or balanced bill amounts are those that are not a plan or patient responsibility.

MTDHN: What is the impact of disputing unreasonable medical charges for patients and health plans?

CC: There’s a tremendous cost savings for both the plan participants and the plan sponsor. The plan’s pricing model sets the reasonable prices for the services using a benchmark.

Typically, plans use Medicare as the reference for determining the maximum expense to be covered under the plan.   Using a reference structure ensures the participant’s point of purchase cost sharing (deductibles, copayments and coinsurance) is less, by avoiding unreasonable charges. But many participants value the protection from balance billing more than the point of purchase savings.   They benefit from true advocacy services, including legal advocacy.

Jack Towarnicky (JT): There’s actually a direct reduction and an indirect reduction in terms of the expense that the plan and the participants pay.

Historically, most of the cost of coverage was shouldered by the employer plan sponsor. But this has changed over the decades.

Today, the employer pays only part of the cost. Today, most plans require employees to shoulder a portion of the cost through regular contributions from pay.  While most employers still shoulder the majority of the cost to fund the plan, continued inflation has significantly increased the nominal and real cost of medical coverage. Plan designs that are structured to avoid unreasonable charges tend to help participants and employer plan sponsors avoid or reduce annual increases in the cost of coverage. 

When you reduce the cost of coverage, it tends to reduce the contributions employees pay.

And, today, most plans incorporate a general deductible as well as copayments and coinsurance.  Surveys show that the dollar amounts of those point of purchase cost sharing items have also increased significantly.   When the covered charge is lower, the deductible and co-insurance are applied to a smaller amount, resulting in savings to participants and the plan.

Indirectly, savings also result from avoiding increased prices for specific services.  Providers won’t realize an increase in revenue by simply increasing the prices they charge. This can cause them to temper increases in subsequent years.

MTDHN: Are your services available nationwide?

CC: Yes, we have handled disputed claims in all 50 states.

MTDHN: Can you discuss surprise billing? How many Americans worry about being able to afford surprise medical bills, and what would this mean for them?

JT: Americans worry all the time when it comes to out-of-pocket costs, including surprise medical bills.

A new survey confirms the challenge of medical bills and medical debts is widespread.  Surveys show 41 percent of working-age Americans—or 72 million people—have medical bill problems or are paying off medical debt, up from 34 percent in 2005. If you add in the 7 million elderly adults who are also dealing with these issues, a total of 79 million Americans have medical bill or debt problems. Sooner or later, all people have medical expenses, so it really isn’t anything unexpected. It’s just that participants oftentimes fail to anticipate a specific expense. .

The same survey showed that nearly two-thirds of U.S. adults under age 65, or 116 million people, had medical bill problems or debt, went without needed care because of the cost, because they were uninsured for a time, or they were “underinsured” – they deferred or skipped needed care to avoid the point of purchase cost sharing (deductibles, copayments or coinsurance).   Two-thirds think there’s going to be another pandemic in their lifetime, and nearly half worry about the escalating cost of healthcare. That includes not only while they’re employed, but also in retirement.

It doesn’t help that the Medicare trustees reconfirm that the Medicare trust fund will run out of assets in 2025 or 2026. This will likely mean an increased payroll taxes – shared equally by  employers and employees.  And, most American workers don’t realize that the Medicare trust only funds hospital insurance.  Medicare Part B (physician services) and Medicare Part D (Rx) are funded by a combination of retiree contributions (approximately 25% of the cost) and general tax revenues (mostly income taxes).  Because federal deficits are $1+B for the foreseeable future, many expect to see noteworthy income tax increases to fund those entitlements.   Higher income taxes equal less take home pay that workers might otherwise save in anticipation of unexpected medical expenses.

CC: The federal government has stepped in to address the issue through the No Surprises Act, as well as through the transparency requirements of the Consolidated Appropriations Act.

But ultimately, the No Surprises Act removes the patient from the out-of-network payment process for certain types of bills, although not all of them. For example, it covers emergency bills, bills provided by an out-of-network provider at an in-network facility and air ambulance bills.

Saying the No Surprises Act prevents balance billing sounds great and looks very positive for Americans, but it remains to be seen if it will actually reduce the cost to the patient in the long run. This goes back to Jack’s comments about the direct and indirect increase in costs over time.

I believe that there are better ways to control costs while providing protection to plan participants, like through the adoption of reference-based pricing plans, which would avoid many of the No Surprises Act requirements. Many, but not all provide for a more predictable outcome and better cost control.

The No Surprises Act is interesting legislation that hits a lot of hot button issues for Americans. I think that there are a lot of implications that will need to play out and it may ultimately not actually be beneficial in the way that many anticipate.

MTDHN: Explain the value of reference-based pricing for plan sponsors and employers, and their participants.

JT: Basically, reference-based pricing is a variant of what used to be called “usual customary” and “reasonable UCR.”

It can be presented this way: “Here’s the maximum amount the plan is going to pay for a particular service.”

Reference-based pricing doesn’t have a set schedule or set of prices that are based on what people bill. Instead, it sets the reference base, which is typically what Medicare charges or what Medicare says is an allowable expense. It is articulated as Medicare Plus, such as 150% of Medicare. So, the employer-sponsored plan is covering expenses for a participant that are typically 150% of what Medicare would cover – even for workers who are age 65+ and eligible for Medicare.   

Most Americans don’t realize that providers regularly charge employer-sponsored plans 2 to 2.5 times what Medicare would allow for the exact same expenses.

For example, let’s say that the covered charge under Medicare would have been $5,000 for a surgery or a hospital stay.  Typically, that same surgery or hospital stay might be billed at $12,500 for a worker covered under an employer-sponsored plan. So, if the employer plan has a $1,000 deductible and then pays 80%, the employee would end up paying about $3,300 and the employer would end up paying about $9,200.

If reference base pricing is set at 150% of Medicare, the covered charge would be $7,500, not $12,500. The employee would pay $2,300 and the employer would pay $5,200. So, the savings are proportional to the plan design – employee’s save 20% of the reduced charge, or $1,000, the plan avoids the rest.    

CC: Reference-based pricing is about protecting plan participants from exorbitant healthcare costs, while providing a competitive edge to employers who adopt these plans. It does require robust patient advocacy to be successful, and that’s exactly the services that aequum provides.

MTDHN: We talk about health costs in terms of surgeries and procedures, and inpatient/outpatient. Does it impact prescription costs?

JT: No.

For pricing prescription drugs, most plans set pricing as a function of the average wholesale price (AWP) with a percentage discount through the pharmacy benefit managers.  Medicare Part D prescription drugs are delivered through a similar process of private pharmacy benefit managers.  Every one of the Part D options are private insurance options.

Medicare essentially contracts out prescription drug coverage. So, they’re negotiating with the drug manufacturers and the wholesalers, but there is no separate reference point.

For comparison, the Veterans Administration and Medicaid have specific schedules, but those are a drug formulary.

MTDHN: Does this have any impact on the international market? Would you go to bat for a payer and participants outside the United States?

JT: The answer is yes.

It comes down to the same set of issues. What are the providers in England, for example, charging? What is the reference price in your plan? Will England balance bill a patient for emergency services in London? Many times, they won’t.

In the case of a foreign expat, you’re typically covered under the local healthcare plan. If you’re a U.S. citizen, usually there’ll be a supplement that’s paid by the company, which could incorporate the reference-based pricing model.

MTDHN: How can plans find out more about this?

CC: We typically partner with third-party administrators, cost management companies, stop-loss carriers and the employers themselves to provide our services.

We have flexibility in how we can deliver those services, however, claims are typically referred to aequum after a plan participant has received a balance bill and submitted it to the administrator of the plan.

Anyone interested in utilizing our services can reach out directly to me to start a discussion on how we can best partner together, so they can protect and provide cost savings to their plans and participants.