Is Your Company the Right Fit for a Reference-Based Priced Health Plan?

 

Employer Sues Anthem for Fraud in Manipulation of Self-Funded Plan

 

Direct Primary Care and Four Ways Employers Can Add it to Their Plans

 

One Mom’s Nose for Savings

Exorbitant Hospital Pricing in the U.S. Undermines Morale, Employee Compensation, and Employer Profits — It Must Stop

As the sun dipped below the horizon on a brisk spring evening, a young mother crouched behind home plate, catching for her daughter.  Already showing signs of a future softball superstar, Gisele unleashed a wicked rising fastball.  It clipped the edge of the glove and smashed into her mother’s face, cracking bone and pushing her nose sharply to the left. 

In a display of savage tenacity, Mom wiped the blood away, grimly reset her nose with a crackling snap, and resumed her catching duties for the evening.  Despite her efforts, the misshapen lump and the nose’s noticeable leftward slant gave her the hardened appearance of a seasoned mob enforcer.

Doctors told her she’d almost certainly require surgery but wanted to let the swelling subside and see how her breathing progressed before they intervened. 

Months later, she couldn’t breathe through her left nostril; she wanted her beak fixed. Luckily, she found herself on a Mahoney Group plan backed with Reference-Based Pricing and Cash-Pay options at recognized centers of excellence.

• So no, UHC and Adventist, her plan isn’t going to pay $74,000. 
• Nor will she pay the $58,000 sought by Cigna and El Camino Hospital. 
• Not going to pay $73,000 either, Western Health and John Muir. 
• And we say nay nay to the $73,000 Santa Rosa Memorial wants from EVERY commercial payer.  (Hat tip to the late, great John Pinette.)
• She’ll pass on the $51,000 Stanford and Blue Shield want.
• And UCSF and Aetna can only dream about that $69,000 they lustily crave.  

At 140% of Medicare, we will pay $7,811 for this surgery.  If circumstances such as geography, timing, or specialized surgeons demand a higher price, we can negotiate.  But that is seldom required.  In this case, Gisele’s Mom is getting her nose fixed up for a voluntary cash price of $7,750. 

Plus, since Mom agreed to use the cash-steerage option, her employer is paying 100% of the cost of the procedure and waving all deductibles and coinsurance. 

And from now on, Mom’s going to wear a catcher’s mask. 

The 5 Forces of Justice - 5 Different Forms of RBP

This ain't yo grandpappy's RBP!  Five different ways employers are installing RBP to save millions on healthcare costs.

Sick, Drugged, and Billed

 All Economic Stakeholders in American Healthcare Are Incentivized by Perpetual Sickness – Except One

The Single Most Powerful Health Plan Cost Containment Tool Just Got a Lot Easier!

News of this began about a year ago, and it is now a reality: Employers have a massive new tool to control healthcare costs.

Just Keep Fighting - Hard Work Eventually Wins

 

How to Become an HR Superhero

With over 15 years of teaching benefits and human resources at the university level, coupled with exclusive experience in working alongside C-Suite executives to implement and manage highly efficient benefit plans, I have a crucial piece of advice for any HR professional looking to be seen, appreciated, and impactful in their career.

 

Employers & Employees: Stop Buying So Much Insurance!

The insurance industry is massive, powerful, and 100% designed to win every single time. Commissions on some items you buy are more than 50%. YOU DON'T NEED ALL OF THAT!

Bad Drugs - Pharmacy Prices Are Killing Employers

Rx Costs have increased 500% since 2000; kickbacks now account for one-third of all spending on pharmaceuticals. What is an employer to do?

  

How Do You Pay Your Reference-Based Repricer?

When engaging in Reference-Based Pricing on your employer health plan, there are several different ways you can pay that repricer: per employee per month, a percentage of billed charges, a percentage of savings, or a flat fee. Which one or ones are best, and why?

5 Reasons You've Never Heard of Reference-Based Pricing

 

Healthcare's Final Frontier: Navigating the Wild West of RBP with Industry Renegades

Omar Arif of ClaimDOC & Scott Schnaidt of HST on All Things RBP

Link to audio. 

Ever imagine healthcare could feel like the Wild West? Welcome to the untamed lands of Reference-Based Pricing (RBP), the sizzling frontier where a select few employers unleash radical savings while giving the traditional PPO system a stiff arm.

Unveil a world where only 3-4% of employers dare to tread, but where jaw-dropping 30-40% savings rain like gold and concierge-level service is the sheriff in town.

Curious about RBP's magic? This isn't just healthcare. It's "Health-FAIR!" Here, employers "price-match" medical costs against benchmark prices, slicing their claims in half compared to big insurers.

Projections say employer healthcare costs will shoot up another 7-9% in 2024. Yet Medicare Part D Premiums are projected to decrease by 1.8%. All major insurers participate in both markets. The lesson? Employers with private insurance are subsidizing Medicare. But hold your horses. With RBP, brace yourself for a 0-2% trend that turns the tables on traditional care.

Jump into this roller-coaster ride of a podcast with your guide through this maze, joined by two titans of the trade—Omar Arif of ClaimDOC & Scott Schnaidt of HST. They've both cracked the code, each in their unique ways, and the results? Nothing short of spellbinding.

🎯 What's on Tap:

• The gears and levers behind RBP
• Navigating the legal minefields
• Secrets from Third-Party Administrators (TPAs)
• RBP's performance across the geographical board
• The art of handling balance bill claims
• Litigation: When & How Often
• Co-fiduciaries: The real deal or just smoke and mirrors?
• Show Me the Money: Their pay structure dissected
• Year-end Report Cards: The Good, the Bad, and the Profitable

And just when you think it couldn’t get any cooler—did one of these guys actually play pro baseball in a global tourney, while the other rocked the stage with NIRVANA? 🎸⚾

Lock in your earbuds. Prepare for a mind-bending journey. You’re entering "The Repricers"—Healthcare’s Final Frontier! 🌌🛸

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. ...

Full story. 

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.

  

Self-Funded Healthplans Are Far More Common Than You Think

There are more self-funded than fully insured plans among companies with 100 or more employees (38,000 vs. 32,000). And if you are an employee at a company with 100 or more employees, you are twice as likely to be covered by a self-funded plan as a fully insured plan.

Full report. 

Employers Expect Major Increases to Health Care Costs in 2023

In 2022, most employers’ healthcare costs increased. According to recent industry data, current signs are also pointing to significantly higher healthcare costs in the upcoming year. Employers now face the difficult task of reigning in rising healthcare costs and keeping employee coverage affordable while trying to remain attractive to current and prospective talent despite their shrinking budgets.

 

Many employers are worried about controlling rising healthcare costs and providing employees with affordable and quality care options. This article explores employer expectations regarding health care costs, reasons health care costs are rising and strategies employers are implementing to address increasing costs.

 

Employers Expect Health Care Costs to Increase

 

Reports from industry experts seem to agree that employers expect major increases in healthcare costs in 2023. Data from Willis Towers Watson’s 2022 Best Practices in Healthcare Survey found that U.S. employers’ healthcare costs are projected to increase 6% next year, compared with an average 5% increase experienced in 2022. Early Mercer survey results suggested that U.S. employers expect their healthcare costs per employee to rise 5.6% on average in 2023.

 

Those costs may increase even more if employers fail to take action to curb rising healthcare costs. If employers fail to make any changes—such as expanding telemedicine options and digital healthcare resources—employers believe the costs for their largest healthcare plans will grow by 7%. The International Foundation of Employee Benefit Plans reported that employers anticipate a 7.5% median increase in medical plan costs in 2023.

 

An analysis from global professional services firm Aon predicted employer health care costs will increase by 6.5% in 2023, with the average costs per employee reaching $13,800. Based on Aon’s analysis, this prediction is below the current inflation figure reported in the consumer price index, but it’s significantly higher than the increase in healthcare costs employers saw from 2021 to 2022. Additionally, HR and employee benefits consulting firm Buck found employer healthcare costs in 2023 are projected to increase between 5.8% to 6.9% in its 2022 National Healthcare Trend Survey.

 

Why Health Care Costs Are Increasing

 

There are a few reasons health care costs are increasing. While most employers had lower claim costs during the COVID-19 pandemic, medical plan costs are returning to pre-pandemic levels as healthcare utilization rebounds. Utilization has especially increased for employees dealing with severe chronic diseases and late-stage cancer due to missed or delayed care during the pandemic. Additionally, many employees are struggling with long COVID-19. Even those employees who have recovered from COVID are experiencing cardiovascular and neurological diseases, which is causing employer healthcare costs to increase.

 

Inflation is also causing healthcare costs to rise, and it will likely drive up costs moving forward; however, due to the long-term nature of provider contracts, some employers may not immediately feel the cost increases caused by inflation. In addition, the recent trend of consolidation among hospitals, physician practices, and commercial insurers is triggering higher healthcare prices for private insurance. Other factors contributing to increased healthcare costs include new technology, novel prescription drugs, specialty drugs, and catastrophic claims.

 

Employer Strategies for Managing Health Care Costs and Improving Affordability

 

Traditionally, employers have addressed rising healthcare costs by shifting increased costs onto employees through higher premiums. While some employers are continuing to implement this strategy, most employers do not want benefit choices to interfere with their recruiting efforts due to the state of the labor market. Therefore, employers are using multiple strategies to manage their healthcare costs while attempting to improve affordability for employees.

 

These strategies include the following:

 

• Self-funding more of their cots with Health Reimbursement Arrangements
• Structuring payroll contributions to reduce healthcare costs for employees
• Employing programs to combat fraud, waste, and abuse
• Increasing healthcare plan budgets
• Contracting directly with high-quality, cost-competitive hospitals and physician networks
• Requiring employees to use cost-effective medical centers or obtain preapproval for scheduled inpatient services
• Offering employees health care navigation and concierge support services
• Evaluating prescription drug costs, particularly for specialty drugs
• Providing telemedicine or virtual care services
• Implementing new benefit programs, such as wellness programs, or using vendors
• Expanding voluntary benefit offerings, such as supplemental health insurance for catastrophic events
• Supporting and effectively managing employees with chronic conditions, long-term illnesses, and complex diseases
• Seeking help from insurance brokers to detail organizational healthcare spending and educate employees on shopping for healthcare services

 

Rising healthcare costs are causing employers to reevaluate healthcare plan designs and offerings. By gathering data and using it to predict where and when increased costs may occur, employers can determine the best strategies to address growing healthcare costs.

 

Summary

 

Employers of all sizes are looking to offer quality healthcare benefits in 2023 while focusing on employee affordability and accessibility. This will be difficult as prices increase and employer budgets shrink as a result of the current economic environment. Employers can act now to proactively prepare for anticipated healthcare price increases and find long-term solutions to mitigate rising costs.

New CA Employment Laws, Trends in Rx Spending, Telemedicine Challenges and More

Benefits in Brief

Employees can put an extra $200 into their health care flexible spending accounts (health FSAs) next year, the IRS announced on Oct. 18, as the annual contribution limit rises to $3,050, up from $2,850 in 2022. The increase is double the $100 rise from 2021 to 2022 and reflects recent inflation. 

Compliance News

A Group Health Plan Without a Public Website may satisfy the new transparency and price disclosure requirements if the plan’s TPA posts the required information on its public website - (Q 11, pg. 12) Federal regulators have now made it clear that self-funded employers can rely on their administrator (TPA) to make the necessary price disclosure files publicly available so long as there is a written agreement in place. One original federal interpretation was that employers had to provide that on their websites, and if they did not have a public website, they had to create one for that purpose. Of course, that seemed ludicrous. And thankfully, regulators now agree it was.

California Expands Who an Employee Can Care for Under the CFRA and California Paid Sick Leave Law - "Beginning January 1, 2023, employees throughout California will be able to use sick leave or take leave under the California Family Rights Act (CFRA) to care for a 'designated person' ... defined as any individual related by blood or whose association with the employee is equivalent to a family relationship. An employee can designate this person at the time they request leave." 

California Unleashes Last-Minute Onslaught of New Employment Legislation - California Governor Newsom recently signed several pieces of employment-related legislation into law including: Supplemental Paid Sick Leave Extension, an expansion of the California Family Rights Act and California Paid Sick Leave, Unpaid Bereavement Leave, Emergency Working Conditions, Reproductive Health Decisionmaking, and Cal/WARN Act Enforcement for Call Centers.  

Benefit News

Trends in Prescription Drug Spending, 2016-2021 - This HHS Issue Brief presents the Agency’s findings on prescription drug spending trends between 2016-2021. 

• In 2021, the U.S. health care system spent $603 billion on prescription drugs, before accounting for rebates, of which $421 billion was on retail drugs. 
• Spending growth on drugs was largely due to growth in spending per prescription, and to a lesser extent by increased utilization (i.e., more prescriptions).
• Expenditure growth was larger for non-retail drug expenditures (25%) than for retail expenditures (13%). 
• Between 2016 and 2021, the location where people received their drugs changed. Americans increasingly received their drugs from mail order pharmacies (35% increase), clinics (45% increase), and home health care (95% increase). During the same time period, there were decreases in drugs received through independent pharmacies (5% decrease), long term care facilities (17% decrease), and federal facilities (9% decrease). 
• Drug spending is heavily driven by a relatively small number of high-cost products. The cost of specialty drugs has continued to grow, totaling $301 billion in 2021, an increase of 43% since 2016. Specialty drugs represented 50% of total drug spending in 2021. While the majority (80%) of prescriptions that Americans fill are for generic drugs, brand name drugs accounted for 80% of prescription drug spending in both retail and non-retail settings, with little change over time. The top 10% of drugs by price make up fewer than 1% of all prescriptions but account for 15% of retail spending and 20%-25% of non-retail spending.
• Prescription drug spending trends have been less affected by the COVID-19 pandemic than health care services. 
• Several provisions in the Inflation Reduction Act address drug pricing, including allowing the Secretary of HHS to negotiate prices in Medicare Parts B and D for selected medications and introducing Medicare rebates for drug prices that rise faster than inflation. These provisions may impact future drug spending trends.
• There were 1216 products whose price increases during the twelve-month period from July 2021 to July 2022 exceeded the inflation rate of 8.5 percent for that time period. The average price increase for these drugs was 31.6 percent.

Telemedicine was made easy during COVID-19. Not any more - "Over the past year, nearly 40 states and Washington, D.C., have ended emergency declarations that made it easier for doctors to use video visits to see patients in another state, according to the Alliance for Connected Care, which advocates for telemedicine use. Some, like Virginia, have created exceptions for people who have an existing relationship with a physician. A few, like Arizona and Florida, have made it easier for out-of-state doctors to practice telemedicine. Doctors say the resulting patchwork of regulations creates confusion and has led some practices to shut down out-of-state telemedicine entirely. That leaves follow-up visits, consultations or other care only to patients who have the means to travel for in-person meetings."

Health and Wellness

Sore Throat, Now the Most Common Sign of COVID - "where once a fever and loss of taste or smell were early warning signs of the bug, the symptom tracking app has revealed the most common symptoms have changed."

People who sleep 5 hours or less a night face a higher risk of multiple health problems as they age - "The study, published Tuesday in the journal PLOS Medicine, took a closer look at a group of nearly 8,000 civil servants in the United Kingdom who had no chronic disease at age 50. Scientists asked the participants to report on how much sleep they got during clinic examinations every four to five years for the next 25 years. For those whose sleep was tracked at age 50, people who slept five hours or less a night faced a 30% higher risk that they would develop multiple chronic diseases over time than those who slept at least seven hours a night. At 60, it was a 32% increased risk, and at 70, it was a 40% greater risk."

Reducing Employer Healthcare Costs via RBP with Armstrong and Getty

 I spent a couple of segments on the air with Joe Getty this morning discussing the very latest healthcare cost increases in and out of the exchanges, as well as how employers are fighting back by option out of the Government-Insurer-Complex madness with reference-based pricing.  

If you want to read more about reference-based pricing, I wrote about it over at Think Adviser, here.  

Compliance and Benefit Updates, June 6, 2022

Compliance Updates

The California Supreme Court unanimously ruled that an employee’s meal and rest period "premium pay is subject to the same wage statement and final pay requirements as other wages earned by employees. 

• Employers must pay all wages, accrued vacation earned and other premium pay immediately upon termination.
• Employers cannot withhold final paychecks to induce employees to return tools or equipment, pay back money owed or turn in forms or reports.
• Final paychecks or deposits must be delivered at the time of termination. Employers should be conscious of possible delays caused by delivery or deposit."

FDA: Pharmacists and wholesalers can import drugs from Canada - "Pharmacists and drug wholesalers can import prescription medicines from Canada for up to two years as part of state programs aimed at bringing down drug costs, according to final FDA guidance released Thursday.

• Why it matters: With President Biden's drug pricing agenda still stalled, the FDA is further clarifying how states could take advantage of lower drug costs abroad without the need to limit prices in the U.S.
• Background: Both the Biden and Trump administrations embraced limited importation to bring down health costs, though experts view the policy as having limited impact."

Newsom Signs Compromise Law Raising The Limit On Medical Malpractice Damages - "California’s $250,000 limit on damages for pain and suffering caused by medical malpractice, a ceiling enacted by lawmakers in 1975 at the insistence of doctors and insurers, will be lifted next year. Gov Gavin Newsom signed compromise legislation Monday, sponsored by consumer advocates and supported by medical groups, that will not remove all limits on malpractice damages but will raise them to account for some of the inflation in the past 47 years. Under AB35 by Assembly Majority Leader Eloise Gómez Reyes, D-Colton (San Bernardino County), the new limits for noneconomic damages in 2023 will be $350,000 for nonfatal medical malpractice by a physician and $500,000 for malpractice causing death. The maximum will rise gradually over the next decade, to $750,000 for non-death cases and $1 million for fatal cases, and increase by 2% a year thereafter for inflation."

Pandemic Fatigue Dooms California’s Excessive Covid Vaccine Mandate Aspirations - "In January, progressive California Democrats vowed to adopt the toughest covid vaccine requirements in the country. Their proposals would have required most Californians to get the shots to go to school or work — without allowing exemptions to get out of them. Months later, the lawmakers pulled their bills before the first votes. One major vaccine proposal survives but faces an uphill battle. It would allow children ages 12 to 17 to get a covid-19 vaccine without parental permission. At least 10 other states permit some minors to do this. Democrats blamed the failure of their vaccine mandates on the changing nature and perception of the pandemic. They said the measures became unnecessary as case rates declined earlier this year and the public became less focused on the pandemic. Besides, they argued, the state isn’t vaccinating enough children, so requiring the shots for attendance would shut too many kids out of school."

Benefit News

HR managers are more burned out than ever. Who is supporting them? "Ninety-eight percent of HR professionals have felt burned out at work in the last six months, according to a recent survey conducted by workplace communication app Workvivo, and nearly 4 in 5 are open to leaving their jobs. ... HR teams and managers should work in tandem to share and clearly outline any mental health benefits their company offers"

Will the Pandemic’s Missing Workers Ever Return to the Labor Force? "Looking at those who have exited the labor force and are not retired:

• 23 percent said that available jobs are not in their field of work interest.
• 17 percent said they haven't been able to find a job that pays enough.
• 9 percent said they have chosen to learn new work skills or want to pursue a different career path.
• 27 percent said that if their savings ran out or ran low, it would motivate them to return."

Employers Pay 224% Of Medicare Prices For Hospital Services - Employer-sponsored health plans paid on average 224% of what Medicare paid to hospitals for the same services at the same facilities, according to a new study from RAND Corporation. The report covers billing for hospital inpatient and outpatient services in 2020. The study said that there were significant variances in prices across states or geographic areas and added that the difference in cost seemed to be linked to hospital market share rather than hospitals’ share of Medicare and Medicaid patients.

• The researchers found that in Hawaii, Arkansas, and Washington, relative prices were under 175% of Medicare.
• Other in states, such as Florida, West Virginia, and South Carolina, relative prices were at or above 310% of Medicare.
• Prices for COVID-19 hospitalization were similar to prices for overall inpatient admissions and averaged 241% of what was paid for Medicare patients.

Note from Craig: This is why I wrote that "America Will Dramatically Change the Way It Provides Health Care by 2030." This trend cannot continue. The federal government controls prices by arbitrarily slashing what it will pay for services in Medicare and Medicaid. This forces hospitals to inflate what they charge for all services to private employer plans. Hence, the tax subsidy is really a cost shift to employers that far exceeds anything any of us pay in FICA. In short:

1. Companies that are large enough (over 300 employees) will self-fund and reference base price their plans. Why pay 224% of Medicare when you can pay 140% and have 97% of your claims sail through without pushback. This saves an employer 20% to 30% on healthcare in the first year alone.
2. Smaller companies will be forced into some sort of defined contribution scheme where the employee is punished for the year over year 6% to 9% increases. Perhaps, as I wrote in the above article this will be done mainly through individual HRAs.
3. Lastly, I believe we'll end up with some sort of Medicaid (not Medicare, that is too expensive) safety net for all who are not fortunate enough to end up in numbers one or two above.

Ninth Circuit Rules That a Temporary Impairment Can Qualify as a “Disability” Under the ADA - "The U.S. Court of Appeals for the Ninth Circuit, the federal appellate court with jurisdiction over much of the western United States (including Washington, Oregon, California and Idaho), ruled last week that an employee’s temporary impairment can qualify as a disability under the Americans with Disabilities Act (“ADA”). The Ninth Circuit’s decision resolves an important question under federal disability law and could signal a significant change in how employers are required to address employees’ short-term medical limitations.

In Shields v. Credit One Bank N.A., plaintiff Shields was employed by Credit One Bank ('Bank') as a human resources generalist. Shields underwent biopsy surgery. The biopsy revealed that Shields did not have cancer, but she had a number of post-surgery limitations (e.g., unable to use her right arm to lift, pull, push, type, write, tie her own shoes or use a hair dryer), and these limitations indisputably precluded Shields from performing the essential functions of her position. The Bank put Shields on a short-term leave of absence, but when she was not ready to return to work after two months the Bank terminated her employment. Shields’ lawsuit alleges the Bank violated the ADA by terminating her rather than offering her a reasonable accommodation, specifically, extending her leave of absence to allow her additional recuperation time. The Bank defended on the grounds that Shields did not have a disability under the ADA because her post-surgery limitations, while significant, were not sufficiently 'permanent or long-term' to meet the law’s requirements. The District Court agreed and dismissed Shields’ claim. The Ninth Circuit reversed. Under the ADA, a disability is defined in relevant part as 'a physical or mental impairment that substantially limits one or more major life activities,' without any reference to how long the 'substantial[] limit[]' might last."

Health & Wellness

The caregiver crisis: How employers can support workers in this new reality - "America faces a caregiving crisis. Whether it’s caring for an aging parent, a sick spouse or a child, more than 50 million Americans are unpaid caregivers for family members and loved ones. Tens of millions of those caregivers are also balancing work with caregiving responsibilities. And while caregiving is a rewarding experience, recent data show that 71% of family caregivers with full-time jobs suffer from mental health challenges and more than half of caregivers say they are too burned out to do their job well. It’s no wonder so many family caregivers are thinking about leaving their jobs."

Half-cup of blueberries a day could keep dementia away, scientists say - "An apple a day may keep the doctor away, but a new study finds blueberries may be better for your brain. Researchers from the University of Cincinnati have found that a half-cup of blueberries can keep middle-aged adults from developing dementia as they get older. Moreover, the study finds adding the fruit to your diet lowers insulin levels and improves metabolic function — making it easier to burn fat for energy."