by admin | Apr 28, 2017 | ACA, Benefit Management, Compliance
While the health care affordability crisis has become so significant, questions still linger—will private exchanges become a viable solution for employers and payers, and will they will continue to grow? Back in 2015, Accenture estimated that 40 million people would be enrolled in private exchange programs by 2018; the way we see this model’s growth today doesn’t speak to that. So, what is preventing them from taking off as they were initially predicted? We rounded up a few reasons why the private exchange model’s growth may be delayed, or coming to a halt.
They Are Not Easy to Deploy
There is a reason why customized benefits technology was the talk of the town over the last two years; it takes very little work up-front to customize your onboarding process. Alternatively, private exchange programs don’t hold the same reputation. The online platform selection, build, and test alone can get you three to six months into the weeds. Underwriting, which includes an analysis of the population’s demographics, family content, claims history, industry, and geographic location, will need to take place before obtaining plan pricing if you are a company of a certain size. Moreover, employee education can make up a significant time cost, as a lack of understanding and too many options can lead to an inevitable resistance to changing health plans. Using a broker, or an advisor, for this transition will prove a valuable asset should you choose to go this route.
A Lack of Education and a Relative Unfamiliarity Revolves Around Private Exchanges
Employers would rather spend their time running their businesses than understanding the distinctions between defined contribution and defined benefits models, let alone the true value proposition of private exchanges. With the ever-changing political landscape, employers are met with an additional challenge and are understandably concerned about the tax and legal implications of making these potential changes. They also worry that, because private exchanges are so new, they haven’t undergone proper testing to determine their ability to succeed, and early adoption of this model has yet to secure a favorable cost-benefit analysis that would encourage employers to convert to this new program.
They May Not Be Addressing All Key Employer and Payer Concerns
We see four key concerns stemming from employers and payers:
- Maintaining competitive benefits: Exceptional benefits have become a popular way for employers to differentiate themselves in recruiting and retaining top talent. What’s the irony? More options to choose from across providers and plans means employees lose access to group rates and can ultimately pay more, making certain benefits less. As millennials make up more of today’s workforce and continue to redefine the value they put behind benefits, many employers fear they’ll lose their competitive advantage with private exchanges when looking to recruit and retain new team members.
- Inexperienced private exchange administrators: Because many organizations have limited experience with private exchanges, they need an expert who can provide expertise and customer support for both them and their employees. Some administrators may not be up to snuff with what their employees need and expect.
- Margin compression: In the eyes of informed payers, multi-carrier exchanges not only commoditize health coverage, but perpetuate a concern that they could lead to higher fees. Furthermore, payers may have to go as far as pitching in for an individual brokerage commission on what was formerly a group sale.
- Disintermediation: Private exchanges essentially remove payer influence over employers. Bargaining power shifts from payers to employers and transfers a majority of the financial burden from these decisions back onto the payer.
It Potentially Serves as Only a Temporary Solution to Rising Health Care Costs
Although private exchanges help employers limit what they pay for health benefits, they have yet to be linked to controlling health care costs. Some experts argue that the increased bargaining power of employers forces insurers to be more competitive with their pricing, but there is a reduced incentive for employers to ask for those lower prices when providing multiple plans to payers. Instead, payers are left with the decision to educate themselves on the value of each plan. With premiums for family coverage continuing to rise year-over-year—faster than inflation, according to Forbes back in 2015—it seems private exchanges may only be a band-aid to an increasingly worrisome health care landscape.
Thus, at the end of it all, change is hard. Shifting payers’, employers’, and ultimately the market’s perspective on the projected long-term success of private exchanges will be difficult. But, if the market is essentially rejecting the model, shouldn’t we be paying attention?
By Paul Rooney, Originally Published By United Benefit Advisors
by admin | Apr 26, 2017 | ACA, Benefit Management
A Summary of Benefits and Coverage (SBC) is four page (double-sided) communication required by the federal government. It must contain specific information, in a specific order, and with a minimum size type, about a group health benefit’s coverage and limitations. If an employer providing an SBC is a covered entity under the Section 1557 of the Patient Protection and Affordable Care Act (ACA), additional requirements apply.
On April 6, 2016, the Centers for Medicare and Medicaid Services (CMS), the Department of Labor (DOL), and the Department of the Treasury issued the final 2017 summary of benefits and coverage (SBC) template, group and individual market SBC instructions, uniform glossary of coverage and medical terms, a coverage example calculator, and calculator instructions.
The SBC is to be used by all health plans, including individual, small group, and large group; insured and self-funded; grandfathered, transitional, and ACA compliant. The new SBC must be used for plan years with open enrollment periods beginning after April 1, 2017. It will not be used for marketplace plans for the 2017 coverage year.
For fully insured plans, the insurer is responsible for providing the SBC to the plan administrator (usually this is the employer). The plan administrator and the insurer are both responsible for providing the SBC to participants, although only one of them actually has to do this.
For self-funded plans, the plan administrator is responsible for providing the SBC to participants. Assistance may be available from the plan administrator’s TPA, advisor, etc., but the plan administrator is ultimately responsible. (The plan administrator is generally the employer, not the claims administrator.)
Changes
The template includes a new “important question” that asks “Are there services covered before you meet your deductible?” and requires family plans to disclose whether or not the plan has embedded deductibles or out-of-pocket limits. This is reported in the “Why This Matters” column in relation to the question “what is the overall deductible?” and plans must list “If you have other family members on the policy, they have to meet their own individual deductible until the overall family deductible has been met” or alternatively, “If you have other family members on the policy, the overall family deductible must be met before the plan begins to pay.”
Tiered networks must be disclosed and the question “Will you pay less if you use a network provider?” is now included. The SBC also includes language that warns participants that they could receive out-of-network providers while they are in an in-network facility. The SBC also indicates that a consumer could receive a “balance bill” from an out-of-network provider.
The “explanatory coverage page” was dropped from the template.
The coverage examples provided clarify the “having a baby” example and the “managing type 2 diabetes” example, in addition to providing a third example of “dealing with a simple fracture.” The coverage example must be calculated assuming that a participant does not earn wellness credits or participate in an employer’s wellness program. If the employer has a wellness program that could reduce the employee’s costs, the employer must include the following language: “These numbers assume the patient does not participate in the plan’s wellness program. If you participate in the plan’s wellness program, you may be able to reduce your costs. For more information about the wellness program, please contact: [insert].”
The column for “Limitations, Exceptions, & Other Important Information” must contain core limitations, which include:
- When a service category or a substantial portion of a service category is excluded from coverage (that is, the column should indicate “brand name drugs excluded” in health benefit plans that only cover generic drugs);
- When cost sharing for covered in-network services does not count toward the out-of-pocket limit;
- Limits on the number of visits or on specific dollar amounts payable under the health benefit plan; and
- When prior authorization is required for services.
The template and instructions indicate that qualified health plans (those certified and sold on the Marketplace) that cover excepted abortions (such as those in cases of rape or incest, or when a mother’s life is at stake) and plans that cover non-excepted abortion services must list “abortion” in the covered services box. Plans that exclude abortion must list it in the “excluded services” box, and plans that cover only excepted abortions must list in the “excluded services” box as “abortion (except in cases of rape, incest, or when the life of the mother is endangered).” Health plans that are not qualified health plans are not required to disclose abortion coverage, but they may do so if they wish.
By Danielle Capilla, Originally Published By United Benefits Advisors
by admin | Apr 14, 2017 | Benefit Management, Group Benefit Plans
Many employers understand the value of having an Employee Assistance Program (EAP) since the heart and soul of organizations are employees. Employees who are physically and mentally healthy, highly productive, engaged in their work, and loyal to their employer contribute positively to their employer’s bottom line. Fortunately, most employees are positive contributors, yet even the best of employees can occasionally have issues or circumstances arise that may inadvertently impact their jobs in a negative way. Having an EAP in place that can address these issues early may mitigate any negative impact to the workplace. This is a win-win for both employees and employers.
A key component of EAP services lies in “catching things early” by assisting employees and helping them address and resolve issues before they impact the workplace. Most employees will use EAP services on a voluntary, self-referred basis that is completely confidential. Some employers may wonder if services are even being used by employees because it won’t be all that apparent, but most EAPs provide a utilization or usage report that will show the number of people served, and possibly the types of reasons services were requested.
If employee issues do begin to appear in the workplace—related to performance, attendance, behavior, or safety—it is important for managers, supervisors, and human resources to also have access to EAP services. They may wish to consult with an employee assistance professional that can provide guidance and direction leading to problem identification and resolution. These issues have the potential to become very costly for the organization—and again, the earlier they can be addressed, the greater chance of success for both employee and employer, with minimal negative impact to the company’s bottom line.
The key to getting the most out of an EAP is to make it easily accessible to employees, safe to use, and visible enough they remember to use it. It is important that employees understand using the EAP is confidential and their identity will not be disclosed to anyone in their organization. Promoting the EAP services with materials such as flyers, posters, or website information with EAP contact information will also increase the likelihood of employees accessing services.
By Nancy Cannon, Originally Published By United Benefit Advisors
by admin | Apr 12, 2017 | Benefit Management, Employee Benefits, Human Resources
With all of the focus that is put into managing and controlling health care costs today, it amazes me how many organizations still look past one of the most effective and least disruptive cost-saving strategies available to employers with 150 or more covered employees – self-funding your dental plan. There is a reason why dental insurers are not quick to suggest making a switch to a self-funded arrangement … it is called profit!
Why self-fund dental?
We know that the notion of self-funding still makes some employers nervous. Don’t be nervous; here are the fundamental reasons why this requires little risk:
- When self-funding dental, your exposure as an employer is limited on any one plan member. Benefit maximums are typically between $1,000 and $2,000 per year.
- Dental claims are what we refer to as high frequency, low severity (meaning many claims, lower dollars per claim), which means that they are far less volatile and much more predictable from year to year.
- You pay for only what you use, an administrative fee paid to the third-party administrator (TPA) and the actual claims that are paid in any given month. That’s it!
Where do you save when you self-fund your dental?
Trend: In our ongoing analysis over the years, dental claims do not trend at anywhere near the rate that the actuaries from any given insurance company project (keep in mind these are very bright people that are paid to make sure that insurance companies are profitable). Therefore, insured rates are typically overstated.
Claims margin: This is money that insurance companies set aside for “claims fluctuation” (i.e., profit). For example, ABC Insurer (we’ll keep this anonymous) does not use paid claims in your renewal projection. They use incurred claims that are always somewhere between three and six percent higher than your actual paid claims. They then apply “trend,” a risk charge and retention to the overstated figures. This factor alone will result in insured rates that are overstated by five to eight percent on insured plans with ABC Insurer, when compared to self-funded ABC Insurer plans.
Risk charges: You do not pay them when you self-fund! This component of an insured rate can be anywhere from three to six percent of the premium.
Reserves: Money that an insurer sets aside for incurred, but unpaid, claim liability. This is an area where insurance companies profit. They overstate the reserves that they build into your premiums and then they earn investment income on the reserves. When you self-fund, you pay only for what you use.
Below is a recent case study
We received a broker of record letter from a growing company headquartered in Massachusetts. They were hovering at about 200 employees enrolled in their fully insured dental plan. After analyzing their historical dental claims experience, we saw an opportunity. After presenting the analysis and educating the employer on the limited amount of risk involved in switching to a self-funded program, the client decided to make the change.
After we had received 12 months of mature claims, we did a look back into the financial impact of the change. Had the client accepted what was historically a well-received “no change” fully insured dental renewal, they would have missed out on more than $90,000 added to their bottom line. Their employee contributions were competitive to begin with, so the employer held employee contributions flat and was able to reap the full financial reward.
This is just one example. I would not suggest that this is the norm, but savings of 10 percent are. If you are a mid-size employer with a fully insured dental plan, self-funding dental is a cost-savings opportunity you and your consultant should be monitoring at every renewal.
By Gary R Goodhile, Originally Published By United Benefit Advisors
by admin | Apr 5, 2017 | Benefit Management, Group Benefit Plans
In the first part of this two-part blog, I recommended a number of important items to keep in mind as you select a stop loss carrier. Additionally, here are a few other things you will want to look for, or ask about, when selecting a stop loss carrier. While this is not an exhaustive list, these are some of the most frequent items I have seen that cause issues or gaps in coverage.
Plan Mirroring
Does the stop loss carrier “mirror” its policy to your employee benefit plan document? I like to think of this whole plan mirroring approach as kind of hand in glove. The relationship between the employee benefit plan document and the stop loss policy should be a complement to one another.
Your employee benefit plan document and your stop loss policy are two separate documents containing many different provisions and terms. Without plan mirroring, stop loss carriers will audit to their stop loss contracts, which can, and do, result in gaps in coverage. Make sure you work with a carrier who will provide plan mirroring.
Medical Necessity Determinations
Although a stop loss carrier can follow plan language, some do, and will, question determinations made by the plan for medical necessity. Stop loss carriers differ on their level of scrutiny in this area. The reality is the medical field is not always black and white on how to treat a patient. It is important to understand the carrier’s position and also the medical guidelines used by your administrative services only (ASO) carrier or third-party administrator (TPA) in making medical determinations.
Recognition of Network Requirements
With your employee benefit plan, you are most likely using a preferred provider organization (PPO) network where provider claims are subject to payment based on an agreed schedule. The agreement you have to access this network predicates what the plan will pay the provider for their services.
A stop loss carrier who is not party to this agreement may question the payment methodology, or feel it can do better on certain claims. They rely on cost containment vendors to review claims and determine what they might feel would be “reasonable” payments. If this is the case, you, as an employer, may be left with a gap in coverage as you are required under your employee benefit plan to reimburse the provider at the contracted rate, but your stop loss carrier may not reimburse you to that level.
It is important to know your stop loss carrier’s position on this type of situation.
Claim Turnaround
Find out what the carrier’s commitment is to paying claims. Many carriers have standards that can vary greatly by carrier. With stop loss, you are typically dealing with large dollar amounts and from a cash flow perspective, you want to know what your carrier’s policy is regarding claims payment.
Will the carrier allow for “advanced funding?” If so, the claim is first adjudicated and processed, but not paid until the stop loss carrier has reimbursed the portion over the stop loss deductible. This, in turn, minimizes the disruption to your cash flow. Many, but not all, carriers offer advanced funding and some will charge an additional fee.
You will want to check with your broker or administrator on the carriers you are considering and what their specific requirements are for advanced funding.
Reasonable and Customary (R&C)
R&C is also known as usual and customary (U&C). As noted earlier, most employee benefit plans take advantage of PPO networks, where provider claims are subject to payment based on an agreed schedule. Outside of claims through a PPO, most plans limit claims payments or reimbursements to R&C charges. This describes the amount an ASO carrier or TPA decides to use as the starting point in the payment for a service.
In each case, it is important to ensure that the employee benefit plan’s definition agrees with the stop loss policy, or that the stop loss policy will follow the provisions of the employee benefit plan.
Secondary Network Access Fees
Typically, a TPA or ASO carrier will provide access to a “secondary” or specialty-type network, such as a transplant-only network. The advantage is that the employee benefit plan and member gain access to discounts, or additional discounts above and beyond that of the primary network offering.
In these cases, there is typically an access fee usually set as a percentage of the savings achieved that is the responsibility of the employee benefit plan. These fees are NOT always reimbursable by the stop loss carrier, or the stop loss carrier may put a limit on the amount reimbursed.
Check with your broker or administrator on whether stop loss carriers you are considering will reimburse you for these types of fees.
While these six considerations are not a comprehensive list, they will certainly set you on the right path for discussions with your broker, or administrator, on selecting a stop loss carrier that not only meets your needs, but also provides the protection necessary for your employee benefit plan and company.
By Steven Goethel, Originally Published By United Benefit Advisors
by admin | Mar 22, 2017 | Benefit Management, Compliance, Human Resources, Medicare
Entities such as employers with group health plans that provide prescription drug coverage to individuals that are eligible for Medicare Part D have two major disclosure requirements that they must meet at least annually:
- Provide annual written notice to all Medicare eligible individuals (employees, spouses, dependents, retirees, COBRA participants, etc.) who are covered under the prescription drug plan.
- Disclose to the Centers for Medicare and Medicaid Services (CMS) whether the coverage is “creditable prescription drug coverage.”
Because there is often ambiguity regarding who in a covered population is Medicare eligible, it is best practice for employers to provide the notice to all plan participants.
CMS provides guidance for disclosure of creditable coverage for both individuals and employers.
Who Must Disclose?
These disclosure requirements apply regardless of whether the plan is large or small, is self-funded or fully insured, or whether the group health plan pays primary or secondary to Medicare. Entities that provide prescription drug coverage through a group health plan must provide the disclosures. Group health plans include:
- Group health plans under ERISA, including health reimbursement arrangements (HRAs), dental and vision plans, certain cancer policies, and employee assistance plans (EAPs) if they provide medical care
- Group health plans sponsored for employees or retirees by a multiple employer welfare arrangement (MEWA)
- Qualified prescription drug plans
Health flexible spending accounts (FSAs), Archer medical savings accounts, and health savings accounts (HSAs) do not have disclosure requirements. In contrast, the high deductible health plan (HDHP) offered in conjunction with the HSA would have disclosure requirements.
There are no exceptions for church plans or government plans.
By Danielle Capilla, Originally Published By United Benefit Advisors
