Posts Tagged ‘Medicare’

Can We Control Healthcare Cost By Utilizing Medicare?

Tuesday, March 22nd, 2016

hcwhealthcarepicThe post below is a guest blog from Dax Hill who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

Did you know Medicare reimbursement rates for healthcare are typically lower than reimbursement rates paid by insurance companies?  Some employers are taking notice and indexing their employer reimbursement rates to the Medicare rates in hopes of trying to control their medical claims spent.

This arrangement is typically called “Reference Based Contracting” or a “Cost Plus” program.

There are many flavors of these types of programs, but here’s how these funding arrangements generally work….

  • An employer self-funds their medical insurance plan utilizing a Third Party Administrator (TPA)
  • The TPA partners with a network of doctors to provide discounts on medical services for “professional” charges. The medical reimbursement rates are based on the negotiated charges agreed upon by the network and doctors….this is similar to most of the current arrangements.
  • For “facility” charges, though, things get interesting. Instead of using the typical insurance carrier’s negotiated rates, reimbursements are based on Medicare reimbursement rates. For example, the TPA agrees to reimburse the medical facility at 120% of the Medicare allowed amount.  Medicare reimbursement rates are generally much lower than the typical insurance carrier negotiated rates.  These lower reimbursements (indexed to Medicare) can lead to claims savings to both the employer and employee.

All of this sounds good so far – who doesn’t want to pay a lower price?  There must be some catch, right?  The main concern for these programs is this: what happens if the hospital or medical facility push back and do not accept the employer/TPA reimbursement rates?  The amounts over the employer’s allowed price gets transferred to the employee.

For example, let’s say an employee receives a $5,000 medical procedure and the employer’s allowed amount is $1,000.  In this scenario, the hospital may decide to “balance bill” the employee for the $4,000 difference.  It is important for the employee to appeal this balance bill.  Most TPAs that focus in this market partner with legal counsel that represent the employee at no additional cost to the employee.  The attorney handles the appeal for the employee.  The attorney will send the medical facility a letter stating the reimbursement is adhering to the employers ERISA plan document and the employee should not be balanced bill.  The attorney explains that the employer and employee are paying above what’s normally acceptable (since most of the facility’s patients are covered by Medicare).

At some point, hospitals and facilities will become more aggressive in trying to 1) collect the balance bill from the employee 2) refuse to provide healthcare to individuals that are enrolled on these types of insurance plans or 3) negotiate on the allowed amount.  In the meantime, these plans are getting attention of employers as they try to best manage their healthcare cost.

Take a look at the pros and cons of Reference Based Pricing and the key considerations employers should look at prior to implementing these plans in this white paper.

Study Shows Possible Negative Effects of Special Enrollment Periods

Tuesday, October 20th, 2015

Blog 015 PictureThe post below is a guest blog from Jay Lowe who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

Recent data from the Centers for Medicare and Medicaid Services show that enrollment in Marketplace plans during Special Enrollment Periods (SEP) continues to increase. Between February 23 and June 30, 2015, CMS reports that close to 950,000 people enrolled in coverage. Under the ACA, a qualifying life event allows someone to enroll in Marketplace coverage at that time. One does not have to wait until the normal open enrollment period that begins November 1 for coverage to be effective January 1. The SEP could be triggered by such things as loss of group coverage, birth of a child, marriage or divorce. While this is a provision of the law that ensures Americans will not have to go without coverage, the SEP could prove to play a big part in the rising rates of the individual market year after year.

The Good and the Bad

The data in the CMS report suggests that during this SEP timeframe those enrolling tended to be younger than average. This can account for things like children aging off of their parents’ plans and parents enrolling their newborns in coverage. This is good as those that are younger tend to be healthier and have more predictable costs year in and year out. Insurers like this as the premium they pay in helps to offset the costs for those that have more health-related issues and tend to use more healthcare. Insuring the young, healthy population is a vital piece in helping to keep Marketplace costs lower and something that the insurance companies count on when determining rates every year. But the SEP provision for the Marketplace can pose a potential problem for these insurance companies.

So that insurers can more accurately determine the risk of their blocks of business and set rates accordingly, the ACA provides for an open enrollment period once per year. Without an SEP, a person is unable to enroll and must wait until the beginning of the next calendar year to have coverage. The problem that the SEP creates is now people can buy coverage outside of the normal annual open enrollment period. While the addition of the younger, healthier members is good, the SEPs also provide an opportunity for unhealthy members to join. The ACA requires insurance companies that participate in the Marketplace to provide coverage to anyone who enrolls. No longer can somebody be denied coverage or be rated up based on a health condition. While many who enroll during an SEP are young and healthy (which the insurance companies like), there are many who are sick and unhealthy. The insuring of this unknown risk poses a big problem for insurers as they are unable to adjust rates during the course of the year based on the medical conditions of those entering the plans. Members who enroll during an SEP get the same rates (based on age and plan design) as those that enrolled in the annual open enrollment period.

Ultimately, insurance companies may be forced to raise rates as claims and loss ratios go up. The SEPs provide a much needed avenue for people to buy insurance coverage. But what will this do to rates? As we enter in to the third year of the Marketplace it will be interesting to see how the insurers continue to respond to constant dilemma.

 

Which Pays First – Medicare or Private Insurance?

Tuesday, December 16th, 2014

The post below is a guest blog from W. Hunter Walton who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

Picture1As we go through Medicare Open Enrollment for this year, it’s important to remember some basics about how Medicare interacts with traditional private medical insurance plans. Many individuals who are entitled to Medicare benefits are still actively working and eligible for employer sponsored health insurance. When a person has multiple insurance plans, coordination of benefits takes place.This determines which payer (insurance company) pays first.

In most instances where group health insurance is involved, Medicare is the secondary payer. That means that the group plan will pay first, paying the amount that its maximum coverage allows, and then Medicare will be asked to pay the remainder. This is important, because when you determine your potential liability, you don’t want to exclude members who may be on Medicare and assume that your group plan will not be responsible for any claims.

Check out the details in our on-demand webinar on Medicare Secondary Payer.

It’s also important to remember some prohibitions that come with Medicare and employer-sponsored group health plans. It is illegal to incentivize employees off of the group plan and onto Medicare. While some feel that this could improve their demographics and potentially eliminate some high cost claimants, the government makes it clear that penalties can be assessed for each time an incentive is offered, whether it is verbal or written.

Another consideration is when your company offers a High Deductible Health Plan paired with a Health Savings Account (HSA). Those who are entitled to Medicare, meaning both eligible and enrolled, cannot contribute to an HSA on a tax-preferred basis. If this is the only plan option your company offers, your Medicare entitled employees may not be able to take advantage of the full benefit of the plan design. Employees who carry a balance in an HSA that was accumulated prior to enrolling in Medicare may still use those funds for Medicare premiums and out of pocket expenses.

If you have any specific questions about Medicare, CMS has a variety of detailed resources.

The Top 10 Healthcare Industry Issues Of 2013 – How They Will Affect Employers?

Tuesday, March 19th, 2013

The post below is a guest blog from Ellen Tucker who serves as Principal, Health & Welfare Consultant  for CAI’s employee benefits partner, HCW Employee Benefit Services.

healthcare_industry_issues This year it is crucial for employers to have a clear understanding of the timeline of each of the components in healthcare reform and a defined strategy around them. It is evident that, while there is change on the horizon, even more change will occur as employers, insurance carriers and members react to the new options and requirements at hand.

 As employers are considering these issues, PricewaterhouseCoopers has released its annual list of the top 10 issues for the healthcare industry, and the topics include a few items of particular importance for employers. This is the list, followed by the implications for employers:

 1)      States on the frontlines of the implementation of the Affordable Care Act (ACA). State officials will decide how to run insurance exchanges, whether to expand Medicaid coverage and what type of insurance market regulation is needed. The biggest challenge facing state governments over the next year is information technology, as most must conduct significant upgrades to existing systems.

 2)      Caring for the nation’s most vulnerable: Dual eligible. Dual eligibles (individuals eligible for both Medicare and Medicaid coverage) are among the nation’s sickest and poorest and often fall through the cracks of two programs not designed to work together. The result is a lack of coordination that often leads to poor quality, inefficiency and avoidable costs. With the ACA set to add 16 million people to Medicaid by 2019, the number of dual eligibles is certain to increase.

 3)      Bigger than benefits: Employers rethink their role in healthcare. Employers have never had a better opportunity to re-examine their long-term role in providing healthcare coverage for their employees. This year will likely be the turning point for how healthcare benefits evolve over the next decade.

 4)      Consumer revolution in health coverage. More Americans will be shopping for their health insurance. As a result, consumers want convenience in how they purchase coverage and transparency in comparing their options. Nearly 40 percent of consumers surveyed by PricewaterhouseCoopers’ Health Research Institute (HRI) said they would purchase insurance at a private insurance company retail store. Consequently, an increase in the use of retail clinics is expected as consumers seek lower cost options for minor ailments.

 5)      Consumer experience hits the pocketbooks of healthcare companies. The Medicare Advantage Star Quality rating system relies on consumer input to generate penalties and bonuses for hospitals and insurers. This could mean a bonus payout of more than $3 billion for insurers and a holdback of $850 million for providers in 2013 based on the impact of the results. Hospitals and health systems are feeling the pinch, as nearly a third of the federal government’s value payment program connects to consumer experience and satisfaction. Moreover, customers support the trend.

 6)      Goodbye cost reduction, hello transformation. With more than 40 percent of consumers postponing care because of costs, hospitals must be competitive. Organizations are making full-scale transformations of their care delivery models, including how and by whom care is delivered. To maintain high quality while implementing sustainable cost reductions, health systems are involving clinicians, staff and patients in redesigning the delivery of care.

 7)      The building blocks of population health management. Population health management shows promise for better health at a lower cost by creating an integrated system of care. Expect to see more partnerships between providers as companies build their population health infrastructure to include shared responsibility for patient outcomes and satisfaction, data collection and analysis, member education and engagement, and a focus on at-risk populations.

 8)      Bring your own device: Convenience at a cost. Only 46 percent of hospitals have a security strategy regulating the use of mobile devices. With more hospitals permitting clinicians to access electronic health records on their personal devices, privacy and security concerns need to be addressed.

 9)      Meeting the new expectations of pharma value. Interest is growing among insurers to partner with pharmaceutical companies to determine unmet medical needs, and improve medication adherence and clinical outcomes. In a recent HRI insurer survey, 43 percent of insurers agreed that they would benefit from a data sharing partnership with pharma companies.

 10)   Medtech industry braces for excise tax impact. The 2.3 percent excise tax on medical devices effective this year could prompt consolidation in a $308 billion global industry consisting mainly of small start-ups with lean product portfolios. Federal bank accounts stand to gain $29.1 billion over the next 10 years from this tax included in the ACA.

 HCW Viewpoint

 Since employers spend a considerable amount of money on healthcare coverage for their employees, health industry issues are of key interest. With the most impactful year regarding healthcare reform implementation quickly approaching, employers are even more eager for information. The decisions facing them are significant, and mistakes could prove costly. 

 Employers have been watching as states decided whether to have a state run exchange, state/federal partnership or a federal run exchange, and whether to implement the Medicaid expansion. For some employers, the Medicaid expansion would provide coverage to additional employees, lowering their possible play or pay penalties effective beginning in 2014. Additionally, employers are determining who they will be required to offer coverage to, whether their benefits are rich enough and whether they meet the affordability requirement. 

 Employers will need to make decisions regarding if they intend to offer coverage to employees in 2014 and beyond, or send their employees to the exchange and pay the penalty. More information regarding the exchanges is emerging, and there may be hundreds of plan designs offered among the four coverage levels. While sending employees to the exchange may sound like the cheapest and easiest option, doing the math generally supports continuing to offer coverage. HCW has developed a “Play or Pay Calculator” that can assist employers in making an objective decision regarding what is otherwise a subjective, reactive one.

 New delivery systems such as accountable care organizations and tiered networks can provide additional options for employers to provide appropriate, cost-effective care over the next few years. These should be part of the overall strategy regarding what actions to take in 2014 and beyond. Staying abreast of health industry issues is critical for employers as decisions are being made. Employers need a custom strategy that is updated with emerging information to allow them to successfully navigate healthcare reform.

 HCW will continue to track these issues throughout 2013, as well as additional emerging information regarding healthcare reform. HCW offers one-hour meetings to walk employers headquartered in North Carolina through a Reform Readiness Plan. To take advantage of this guidance, call 919-403-1986 today and schedule a meeting with on of our experts.

The Calm Before the Storm: Surviving the Impending Supreme Court Decision on Healthcare Reform

Tuesday, June 19th, 2012

The post below is a guest blog from Lindsey Surratt who serves as the Compliance Officer for CAI’s employee benefits partner, HCW Employee Benefit Services.

The United States Supreme Court is on the verge of issuing an opinion on the Patient Protection and Affordable Care Act.  The forecast is somewhat unpredictable, but the Court’s ruling can be narrowed down to a few possible outcomes.  The Court could take an “all-or-nothing” approach and either uphold or strike down the entire law.  Or, the Court could eliminate the Individual Mandate and allow the remainder of the law to stand.  The Court could also strike down other provisions in addition to the Individual Mandate, such as the prohibition on pre-existing conditions and community rating.

The tone of oral arguments and questions asked by the Justices, including Chief Justice John Roberts and Justice Anthony Kennedy (likely the swing votes in this case), seem to indicate that the Individual Mandate will not survive.  But, predictions based on questioning in oral arguments have been an unreliable indicator of past Supreme Court decisions.

The arrival of the Court’s decision, much like a hurricane, is inevitable.  However, the preparation of carriers and employers thus far, as well as the response from carriers, employers, individual voters and State and federal governments, will shape the future of healthcare reform in the aftermath of the Court’s decision. The opinions of industry experts and legal scholars run the gamut from pandemonium to uneventful.

Dr. Bruce Vladeck, former Director of Medicare and Medicaid under President Clinton, predicts a decision overturning part or all of the law will result in “chaos” and an increase in the number of deaths among the uninsured population.  Other experts, including Gail Wilensky, Director of Medicare and Medicaid under President George H.W. Bush, predict a much more tempered result with reforms taking place at a slower pace.  Some reforms will continue regardless of the Court’s decision, with UnitedHealthcare, Aetna and Humana announcing voluntary extensions of certain insurance benefits regardless of the Court’s opinion.

Whether the Court’s decision wipes out the entire law or leaves pillars of it standing, state and federal legislators will continue to rebuild various aspects of the healthcare system in the United States.  There is no doubt that healthcare reform will emerge again as a pivotal issue in the 2012 Presidential Election.   What proactive steps can employers take to survive the upcoming Supreme Court decision outside of legislative and regulatory mandates?  Just as healthcare reform continues to evolve, so should an employer’s benefit strategies.

Implementing or expanding wellness program offerings, thoughtful evaluation of contribution strategies that incentivize employee involvement in healthcare delivery choices, consideration of alternate funding options, and increasing benefits education opportunities for employees will help employers weather the storm.  Although the regulatory landscape of healthcare reform will continue to change, the ultimate goals of increased efficiency, improved outcomes, and cost containment will remain the same.

By engaging in thoughtful benefit strategy choices, employers have the power to generate change in the healthcare market, even in the face of turbulent legal and legislative action.