Thursday, February 9, 2017

Open Memo re FSA service for Mass. GIC

For the convenience of my colleagues in Massachusetts Commonwealth employment, I post here the fruits of my recent investigation into the state's FSA service.  I beg the indulgence of persons beyond, for whom this item will be of limited interest.

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OPEN MEMORANDUM

9 February 2017

From    Richard J. Peltz-Steele
            in personal capacity, but for purpose of identification: Professor, UMass Law School

Re        Service of ASI Flex as the FSA provider for GIC

Cc        ASI Flex c/o Kaleena Kollmeier, Account Manager
            GIC c/o Rachelle S. Mercier, Esq., MPH, Associate General Counsel
            UMass Dartmouth community c/o UMD Forum listserv



I.          Introduction

I have experienced growing frustration with ASI Flex as Flexible Spending Account (or Arrangement) (FSA) service provider for the Group Insurance Commission (GIC).  I will here conflate the two components of the FSA, the Health Care Spending Account (HCSA) and the Dependent Care Assistance Program (DCAP).  My experience is exclusively with the HCSA, which is to speak neither favorably nor unfavorably with respect to the DCAP.

This month, a straw broke my camel’s back when a document verification submission I made for medical expenditures on my FSA Visa was twice rejected for insufficiency, despite my submission of the requested documentation.  The rejections were improper; ASI Flex’s investigation of the matter confirmed error.  I appreciate ASI Flex’s investigation and correction of the matter.  I am nevertheless left with boiling frustration over repeated problems.  Given the substantial time and energy that I have to invest in working with ASI Flex to claim or document disbursement of my own money, I am left to wonder whether the slim benefit of a tax advantage is worth the effort at all.

Accordingly, I conducted an informal investigation of the efficacy of ASI Flex participation.  This investigation has three prongs.  First, I sought input from my colleagues at UMass Dartmouth (UMD) to contextualize my experience with the experiences of others.  Second, I talked with ASI Flex Account Manager Kaleena Kollmeier, to explain my concerns and better understand ASI Flex’s position.  Third, I requested from the GIC all effective contracts and terms of service that govern or affect the relationship of GIC claimants with ASI Flex.

In this memorandum, I will share my findings in each vein and draw modest conclusions.


II.        Feedback from UMass Dartmouth

I was struck on two counts by the responses to my informal query at UMD.  First, I was surprised with the high level of anxiety, frustration, and vehemence that came through the communications.  I expected that some others, like me, might report occasional bad experiences.  I did not expect to find so many people at the end of their ropes, having already terminated participation in the FSA program or contemplating termination.  Second, strong common threads of complaint came through the communications.  That is, the problems people report with ASI Flex arise with remarkable consistency from a specific problem, namely the process of follow-up documentation for FSA Visa card transactions.  One might hope that such consistent focus might make resolution more feasible.

I will transcribe here representative comments from my UMD colleagues, without attribution so as to protect respondents’ privacy.

First, there were some positive comments.

I have not had problems at all.  [On follow up, respondent wrote that she does not use the FSA Visa, but submits paid receipts and documents through the online interface.]

I have never had any problems with them.  I have used them for reimbursements of day care and summer camps only and provided them with the receipts each time.  Always received prompt payments.  [On follow up, respondent wrote that she used only DCAP, filing reimbursement requests, and not HCSA and FSA Visa.]

The more numerous negative comments almost all concern the process of follow-up documentation.  I have grouped these comments loosely:

          efforts to work on documentary demands;

I’ve not had any trouble with claim denials, but I find that nearly every time I use my [FSA Visa] card for an “uneven expense,” $333 or $29.14, I’m always asked for documentation.  If the charge is a round number $30, $400, at the same vendors (dentist, eye doctor, optometrist, pharmacy) the charges sail through.

[T]he number of requests for documentation “for IRS purposes” certainly has been more frequent than I expected.

At first, it annoyed the heck out of me that I needed to gather additional documentation for the insurance folks, after years of not needing to do so.  I later learned that some of the providers I use (my kids’ dental, for example) only submitted the charge and did not include explanation for the charge.  Now I pretty much know which providers need to be reminded to give me an invoice that states the work that was done, so I can scan it over to ASI.

I . . . have questioned their constant request for additional information on a charge, as little as a $10 copay.  I’ve had to go retrieve receipts several times, and often they are from the same office.  You can clearly see they are all from a doctor’s office.  I did call and ask why they are questioning so many things that in the past never seemed to be an issue.  After all, this is our money.  The individual I spoke with could not answer any of my questions.  I’m not impressed with this company.

          burgeoning frustration working on documentary demands; and

After jumping through many frustrating hoops with ASI Flex, I have learned to just keep a scanned copy of every single receipt, and to request some type of invoice for every single service to include with that receipt.  When I provide a receipt which clearly states the name of a doctor’s office at the top, I’m not sure why they can’t presume that it is a co-pay, since I’m not sure what else anyone would pay a doctor’s office for, but whatever.  I got tired of going back and forth with them on these things and found that if I just do it this way, more often than not, they don’t ask for receipts. . . .  [T]hey are a pain to work with!

I am having significant issues with ASI Flex and documentation requirements.  I have had multiple issues, and some of the documentation claims seem random.  Follow-up documentation has been rejected for no reason.

[A]ll of my bills are paid with the Visa debit card [ASI Flex] issue[s].  Having said that, I have been very dissatisfied with the amount of documentation I am required to provide ASI Flex, including almost every payment made to [provider name redacted].  [O]ne would have thought that once a vendor is in the system, that should suffice.  I always thought that the onus was on the employee in case of an audit and not the employer.  I have complained to HR before about them.

          pushed to the breaking point.

ASI Flex is a disaster, and I have complained to HR about it on a few occasions.  I continue to be denied payment despite having all of the proper paperwork from the doctors.  I actually may not renew it because it is such a mess.

I did participate in ASI Flex last year, but it got to the point where I was needing to scan and upload each doctor visit from [provider], which seemed excessive, before I could use my card, my money, so I decided not to continue with it. . . .  [I]t’s sad that they make the process so cumbersome!  I could understand if you were making purchases of dubious intent at Rite Aid or CVS, but when the bill is directly from a doctor’s office?  . . . I think the company we used before ASI Flex . . . was much easier to deal with, and I don’t think I ever had to submit additional paperwork.  Maybe we can go back to them?

I got so frustrated and angry with ASI Flex that I discontinued enrollment in the program.  They wanted documentation for every transaction. I had to call them a number of times as well as providers to get the right documentation.  It makes my blood boil again to remember back on having to deal with them.

I found them very difficult to work with.  My son had a [medical procedure, redacted for privacy], and their continual requests for documentation for his . . . medications and other documentation—quite simply made the program more trouble than it was worth.  I did not re-enroll in the program.

I stopped using ASI Flex, as I found their process to be ridiculous and cumbersome.  I agree that their request for extra information seemed superfluous most of the time.  I had never had issues with BenStrat [the predecessor FSA provider], only having to explain the odd request (such as therapeutic massage . . . ). . . .  [F]inally I dropped [ASI Flex]. Terrible experience, and I don’t know why we went from a great company in New Hampshire to an awful company in Missouri.

Noteworthy here to my mind is the common thread of follow-up documentation.  This same problem has fueled my own frustration.  I learned from ASI Flex a couple of years ago that medical expenses charged to the FSA Visa card will require follow-up documentation for every expense other than a co-pay in a doctor’s office—perhaps the even amount referred to by one respondent—and an Rx co-pay at the pharmacy counter.

Thus some questions are raised.  Is all of this follow-up documentation necessary?  Why is the follow-up documentation process so burdensome?  And why are claims denied even after follow-up documentation is provided?

The respondent who pointed out that the burden of audit falls on the claimant, not on ASI Flex, makes a fair point.  And more than one respondent aptly wondered why ASI Flex cannot track a registry of providers, so that follow-up documentation is not required again and again for the same provider, even for the same service. 

When ASI Flex demands follow-up documentation, the claimant is forced to be the go-between, shuttling, sometimes physically, back to providers’ offices—often requiring multiple telephone calls during restrictive business hours—to try again and again to secure documentation that will satisfy ASI Flex.  Then the user has to organize and submit that documentation to ASI Flex, whether by mailing it, or by scanning and uploading to the secure online portal.  The process is time consuming and labor intensive, a far cry from the ease of use that an FSA Visa card promises.

Adding insult to injury, I and others experience problems with claim denial or documentation rejection subsequent to the provision of follow-up documentation, whether because the documentation is not sufficient for ASI Flex’s purpose, or because of ASI Flex error.

Heavily complicating matters is the complexity of communication between claimant and ASI Flex.  ASI Flex reserves for itself the ease of communicating with claimants through the online “Secure Message Center.”  Its messages are often far from helpful.  For example, this was the explanation of one (erroneous) claim denial I received:

We received your submission for documentation to support a debit card transaction that could not be electronically substantiated and could not process it because the statement does not include the necessary information, the charges on the submitted statement do not match the outstanding card transaction OR the item is not eligible through your employer's FSA program. This transaction will still appear in your online Account Detail as requiring documentation, and if you do not take action, may lead to your FSA debit card being suspended. In order to resolve this situation, please submit a statement for an eligible expense that you paid for out-of-pocket (i.e. did not use your FSA debit card to pay for) with a completed and signed claim form, send in the correct itemized statement of services for this transaction, or send in a check or money order payable to ASIFlex for the amount in question. Please call ASIFlex at 800.659.3035 with questions.

Clearly some representative at ASI Flex found my follow-up documentation wanting, but why?  Three possible reasons are cited in the alternative.  Would it be impossible to narrow it down to one?

A more troubling problem with the Secure Message Center is that it is only a one-way channel of communication.  A claimant’s options to follow up on secure message such as this one, maybe to ask for clarification, are limited.  A telephone call is invited, but no hours to call are stated.  In fact, the line is staffed for some evening and Saturday hours, but not 24/7.  ASI Flex has an email address, asi@asiflex.com.  But that address is not stated in the claim denial nor shown anywhere on the claimant’s interactive website, my.asiflex.com.  Email to that address anyway is neither secured nor tied to the claimant’s account and matter.  Thus the claimant is left with a vague denial of payment and no good way to respond.

That claimants bear the heavy burden of having to deal with providers on the one hand—subject to their whimsically inadequate documentation, limited channels of communication, and narrow business hours—and then have to deal with ASI Flex on the other hand—subject to cumbersome communication portals, vague claim denials and documentation rejections, and, again, limited channels of communication during only slightly more generous business hours—is a recipe for, as one respondent put it, “disaster.”


III.       Feedback from ASI Flex

ASI Flex Account Manager Kaleena Kollmeier allowed me to voice complaints, provided me some helpful additional information, and expressed a commitment to improving ASI Flex service.  Here I share some of what I learned with respect to the problem of follow-up documentation.  Naturally what Kollmeier told me I recount here in my words, so accuracy may be limited by my understanding.

With respect to the need for follow-up documentation, I, like some respondents, remembered BenStrat being less demanding of follow-up documentation than ASI Flex.  Kollmeier said that ASI Flex follows industry norms with respect to follow-up documentation for FSA Visa card purchases—my observation being essentially correct that only round-number, doctor’s-office or pharmacy-counter co-pays will go through unchallenged—and that ASI Flex practice in that respect might mark a necessary departure from the practices of a former provider.  Kollmeier said that ASI Flex is required by the IRS to make disbursements only upon evidence that the provider, service, and dates of service meet eligibility criteria and match the claim by patient identity and amount of charge.

Kollmeier cited IRS Publication 969, which may be found in 2015 iteration at https://www.irs.gov/pub/irs-pdf/p969.pdf.  That publication states, at page 16:

You must provide the health FSA with a written statement from an independent third party stating that the medical expense has been incurred and the amount of the expense. You must also provide a written statement that the expense has not been paid or reimbursed under any other health plan coverage. The FSA cannot make advance reimbursements of future or projected expenses.

Debit cards, credit cards, and stored value cards given to you by your employer can be used to reimburse participants in a health FSA. If the use of these cards meets certain substantiation methods, you may not have to provide additional information to the health FSA

I note, however, that this text does not directly contradict the observation of one respondent, that the onus of audit falls on the claimant.  I suggested to Kollmeier, and maintain, that ASI Flex is engaging in excessive scrutiny.

With respect to the plea of some respondents that ASI Flex should be able to track providers and recognize doctor’s offices as inherently within FSA coverage, Kollmeier said that in fact some doctor’s offices do provide services that are not eligible for medical reimbursement, such as massage therapy without special approval.  On that basis, ASI Flex regards itself as bound to inquire as to the nature of all services provided, on every occasion, for payments, even to doctor’s offices, in excess of routine co-pays.

With respect to the explanation of claim denials, Kollmeier said that the language of messages, such as that which I quoted above, is agreed upon between ASI Flex and the GIC.  I note that that fact might move some of the blame for vagueness to the GIC, but does not mean that claimants are being well served.

With respect to communication deficiencies, Kollmeier acknowledged limitations and suggested that there is room for improvement.  She also educated me as to some avenues of communication that might help. 

First, Kollmeier told me that claimants may use—not to submit claims, but to communicate with ASI Flex—the email address asi@asiflex.com.  While this email address is not published on the claimant’s account website, https://my.asiflex.com/, it is visible on the lower-right corner of the general ASI Flex website, http://www.asiflex.com/, where there are also toll-free telephone and fax numbers.  I note that this ASI Flex home page is not a web page that claimants are encouraged to consult; indeed, I did not know it existed.

It is useful to know moreover that there is an ASI Flex home page specifically dedicated to ASI Flex service of the GIC account, http://www.asiflex.com/gic/.

Second, Kollmeier told me about the evening hours of the toll-free telephone line.  The line is staffed 8-8 Monday through Friday and 10-2 on Saturday.

Third, Kollmeier told me about the ASIFlex Mobile App, which is available in the Google Play Store and the Apple App Store.  ASI Flex has publicized the app, and I knew it existed.  But I did not know that it had any functionality superior to the web portal.  Kollmeier told me that it has one functionality that might make life easier for claimants to provide follow-up documentation, that documentation can be submitted via smartphone photograph.


IV.       Contracts and Terms of Service

I requested from ASI Flex, via Ms. Kollmeier, and from the GIC, via online public record request, all effective contracts and terms of service that govern or affect the relationship of GIC claimants with ASI Flex.

From Kollmeier, I learned that terms of service of claimant interaction with ASI Flex are contained in the enrollment form.  For example, the enrollment form for HCSA accounts for new hires is, at the time of this writing, located on the state website here,

The state also lists FSA FAQs here,

I note that here,
one can find various resources, including an FSA Appeal Form,

ASI Flex also features various resources from its home page, http://www.asiflex.com/, under the “Resources” tab, including links to forms, FAQs, and a table of eligible expenses.

The GIC was very accommodating in working with me to fulfill my public record request.  In partnership with GIC counsel, I narrowed my request to procurement-related materials.  I have reviewed all of the GIC documents, and ASI Flex seems to have been retained according to an ordinary and lawful process.

The terms of the GIC-ASI Flex relationship almost entirely concern the administration of the program and describe the claimant-ASI Flex relationship only in broad terms.  I am temporarily parking online the documents I received for anyone to review.  They may be downloaded in this ZIP file: https://dl.dropboxusercontent.com/u/12999009/ASIFlex/GIC-ASIFlex%20Documents.zip (about 28.6 megabytes).

Most of the documents are routine forms, but I direct interested persons to two documents of more substance, the “Bidder Q&A” and “ASI Flex Plan Document.”  In Bidder Q&A, the GIC answered bidders’ questions about expectations for the FSA program.  The document provides some commonsense guidance about how the FSA program is expected to work.  The ASI Flex Plan Document lays out in terms as specific as they get what program features ASI Flex promised to provide.

Two observations about the FSA program are made plain in these documents and perhaps merit mention.  First, ASI Flex is paid wholly from the monthly administrative fees paid by plan participants.  There is no payment for services from GIC to ASI Flex.  Second, funds forfeit from FSA users’ plans are returned to the GIC.  The GIC uses those funds for plan administration.  Funds may be used to balance accounts, for example, when an employee leaves midyear with paid claims in excess of contributions to date.  And funds are used to support plan programming, such as breakfasts organized to inform employees about FSA options.  Both of these arrangements in the GIC-ASI Flex program are, to my understanding, typical of how FSA programs operate.


V.        Conclusions

ASI Flex has, through our account manager, signaled a willingness to meet our needs.  But the design of the service process bears serious deficiencies that render the very value of the FSA program debatable for GIC participants.  Some of these deficiencies derive from the onerous limitations on FSA programs under federal law.  But there remains within those constraints ample room for ASI Flex and the GIC to improve the service experience for the claimant-GIC participant, and indeed, to ensure that FSA participation is even worth the effort, especially for users of the FSA Visa card.

With respect to the need for follow-up documentation on card purchases, ASI Flex should streamline its claims process to reduce the need.  A hard constraint is the IRS requirement that eligibility information be provided by a third party.  But the IRS affords substantiation measures to bypass this requirement, and ASI Flex uses bypasses with respect to some co-pays.  An automatic rule that every submission must be supported by follow-up documentation unduly shifts ASI Flex’s administrative burdens to the claimants, who pay for ASI Flex services.

ASI Flex has sufficiently lengthy experience with recurring claims from recurring providers that alternative substantiation methods should be feasible with some investment of effort.  Moreover, the point remains apt that the claimant, not ASI Flex, principally bears the onus of audit.  If one provider offers all eligible services except for massage therapy, then a claimant ought be permitted the opportunity simply to attest—by electronic checkbox—that the service was not for massage therapy, rather than requiring every claimant to run ragged trying to obtain additional information from that provider’s office about every transaction.

ASI Flex should also reach out to medical service providers and work pro-actively to ensure that providers give their clients, in the first live interaction, all of the written documentation the clients need for claims.  A patient should never have to return to a doctor’s office to obtain follow-up documentation required for an FSA claim, because of a missing date or service description for examples, unless the patient herself or himself failed to keep track of paperwork previously rendered.  Medical service providers and ASI Flex are both in the business of client service.  That client-claimants are stuck in the middle, victimized by a twisted game of “Red Rover,” should be unacceptable to the GIC.

With respect to the explanation of claim denials or documentation rejections, ASI Flex and the GIC should ensure that every claim or rejection is treated with individual care.  No denial or rejection should ever issue that does not specifically state the reason for denial or rejection and provide the claimant with the full array of redress options, including all avenues of communication, and how and when to avail of them.

With respect to communication, ASI Flex should reexamine and enhance its channels of communication with clients.  At minimum, the Secure Message Center should be a two-way avenue of communication, as is typical today in bank-client online communication systems.  Better would be a live chat function, as is typically found on retailers’ website today.  The hours of operation of the telephone line should always accompany dissemination of the number.  The ASI Flex email address should be on all correspondence and on the client account website, and the email account should be attentively responsive.

Since the federal government lowered the caps on FSA set-asides, the efficacy of program participation for many claimants has become dubious.  That is the fault of neither ASI Flex nor the GIC.  However, ASI Flex and the GIC together owe a duty to program participants to minimize the transaction costs of program participation, including participants’ own time and energies, so as to maximize the efficacy of participation.  The bureaucratic design of the present claims’ system seems better calculated to reduce transaction costs for ASI Flex than for the customers who pay for ASI Flex’s services.  The nature of complaints about those services reveals a consistent and persistent focus on deficiencies in the follow-up documentation process.  Even within legal constraints, there is ample room for ASI Flex to address those deficiencies.  Meanwhile the GIC should be advocating transparently for the reasonable expectations of plan participants.

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