Wednesday, April 19, 2023

Scouring your PHI from Everyone, Everywhere, All at Once

My latest is now up over at BenefitsPRO

You come to work one day, and notice Susan is not there. Nobody knows what happened to her, and everyone appears oddly tight-lipped about her absence. Finally, you and your coworkers are told she has taken a leave of absence. No other details are given. Attorneys, corporate compliance officers, and human resource personnel have been properly coached as to the myriad of stringent health privacy rules in the workplace, and everyone is rightfully paranoid.

I am reminded of an eccentric law professor I had who relished saying, “No good deed goes unpunished,” whenever discussing the inevitable unintended consequences of legislation or contract terms.

But after 22 years of HIPAA Privacy, I am not even sure the main impetus behind its passage was ever a good deed – at least not for those who have weaponized its use against employers.

The Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule was designed to protect individuals’ medical records and other personal health information. However, the latest practices by health insurance carriers raise serious concerns about how they circumvent these rules to maximize premiums. ...

I spent some time with Armstrong and Getty this morning, discussing this story and the hidden tax built into all of our employer plans due to Medicare and Medicaid's chronic inefficiency and underpayment.


Thursday, April 13, 2023

1 in 5 California Hospitals is in Danger of Closure

California hospitals are in serious trouble due to:
  • The misguided government prohibition against non-COVID care during the pandemic;
  • Overall inflation;
  • And chronic underpayment from Medicare and Medicaid (only covering about 75 cents on the dollar of actual costs).
The underpayment then forces employer plans to pay absurdly high prices (224% of Medicare in last year's study) to make up for the fact that many hospitals can't survive on government reimbursements.

When Medicaid (Medi-CAL) first passed, it was designed to cover the lowest 2% of wage earners. It now makes up 80% of patient volume at many of these rural hospitals, and about four in ten Californians are born into it. That's what you call mission creep at its finest.

As Patty Maysent, the CEO of UC San Diego Health, explains, "[t]here are hospitals all around the state ... that are two, three or four months away from running out of cash."

There are answers! Employers need not suffer through this. I've written about this extensively. Here are a couple of good starting points:
  1. The fiduciary imperative of reference-based pricing: A legal and financial analysis; and
  2. America will dramatically change the way it provides health care by 2030

Wednesday, April 12, 2023

The Fiduciary Imperative of Reference-Based Pricing: A Legal and Financial Analysis

This is my latest; it can be read in full over at BeneftsPRO

Abstract: This article examines the fiduciary obligation of CFOs, VPs of HR, and other health and welfare plan fiduciaries under the Employee Retirement Income Security Act (ERISA) to evaluate Reference-Based Pricing (RBP) in the context of their health insurance plans. The article argues that, given the federal government's endorsement of RBP and its proven efficacy in reducing employer costs and expanding participant options, it is now virtually impossible for a plan fiduciary to lawfully discharge their duties in accordance with ERISA without at least considering the implementation of RBP.


The landscape of American healthcare has undergone significant transformations in the past decade, with the emergence of numerous innovations and cost-saving measures. The most impactful development is the rise of Reference-Based Pricing (RBP), a pricing model proving to be a game-changer for employer-sponsored health insurance plans. This article argues that, given the demonstrated benefits of RBP, CFOs, VPs of HR, and other plan fiduciaries under ERISA are now under a fiduciary obligation to evaluate the potential incorporation of RBP into their health insurance plans – at least with respect to employers that are large enough to consider particularly self-funding their health plans. 

I. Fiduciary Obligations Under ERISA

ERISA imposes a fiduciary duty on plan administrators to act solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits and defraying reasonable expenses of administering the plan. To fulfill this duty, fiduciaries must adhere to certain principles, including prudence, diversification, and adherence to plan documents.

The duty of prudence requires fiduciaries to act with the care, skill, prudence, and diligence that a prudent person would use in a similar situation. This duty is not merely a passive obligation; rather, it compels fiduciaries to actively engage in the management and oversight of plan assets, constantly seeking opportunities to enhance the value and cost-effectiveness of the plan.

Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir. 1982) emphasizes the importance of fiduciaries acting with prudence and diligence in managing ERISA plans:

In every case charging breach of ERISA fiduciary duty, ... the central inquiry is whether the fiduciary has acted 'with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.'

... Full story at BenefitsPRO

Sunday, April 9, 2023

Social Security will be Unable to Pay Full Benefits a Year Earlier Than Expected

Implications/Opportunities for Employers:

  1. Attract and retain talent through enhanced retirement benefits: As concerns about Social Security's long-term sustainability grow, employers can differentiate themselves by offering attractive retirement plans, such as 401(k) matching or pension plans. This can help them attract and retain top talent who are looking for financial security in their retirement.
  2. Encourage longer careers and phased retirement: Employers can capitalize on the potential need for older workers to continue working by offering flexible work arrangements, such as part-time or remote work, to keep experienced employees engaged and productive. This can help employers maintain a skilled workforce and benefit from the knowledge and expertise of older employees.
  3. Financial education and planning: Employers can provide resources, seminars, or workshops on financial planning and retirement savings to help employees better prepare for their financial future. This can lead to increased employee satisfaction and loyalty, as employees appreciate the support in navigating a potentially uncertain financial landscape.
  4. Promote a culture of saving and financial wellness: Employers can encourage employees to save and invest for their retirement by offering financial wellness programs and incentives for participating in retirement savings plans. This can help create a financially savvy workforce that is better prepared for the future.
  5. Collaborate with policymakers: Employers, as significant stakeholders in the retirement landscape, can use their influence to advocate for policy changes and reforms that address the Social Security funding crisis. This can help protect both their employees' interests and their own long-term business interests. 
Full story.

Are Employers Selecting Affordable Healthcare Benefits?

Healthcare costs in the US continue to rise, with employers paying over $13,800 per employee for healthcare in 2023. McKinsey predicts that healthcare spending could take up as much as 75% of discretionary income for those making less than 200% of the federal poverty level. 66% of employees say the cost of receiving care through their current health plan is too expensive, and over half feel that their care is more expensive than expected in the last year.

Arizent's research shows that 70% of employers believe they offer the best possible benefits, but 68% feel that their benefit design is limited by their budget. Employers who describe themselves as innovative are more likely to offer digital health tools and family-building benefits, while most agree on the importance of evaluating benefit offerings each year.

The most commonly delivered benefits are health, dental, and vision insurance, and paid sick leave, but employees desire benefits related to gym access, nutrition support, wellness activities, mental health support, chronic condition support, and family-building assistance.

Telehealth sees high utilization rates, with 72% of employees have participated in some form of virtual care appointment in the last 12 months, while mental health support, family-building assistance, and paid parental leave are used less. Healthcare navigation services are on employers' radar, with nearly 80% of employers motivated to include them to provide a better employee experience, improve health outcomes, and reduce costs.

Full story here