Rising health care costs are putting more and more pressure on employers every year. Providing a desirable plan has become an enormous expense, but companies still need to offer health insurance benefits to stay competitive and recruit.

“Health insurance is no longer an employee benefit; it’s a cost of doing business,” says Albert Ertel, COO of Alliant Health Plans. “You have employers trying to find a balance between what they can afford and what the employees desire.”

Smart Business learned more from Ertel about how employers can find that balance.

What options do they have to keep the costs manageable while also offering a quality benefits program?

One of the mistakes employers make is looking at their health plans on a year-to-year basis instead of using a long-term, multi-year approach. There used to be 10 to 15 insurance companies employers could get quotes from that would compete for their business. There are only a handful of competitors in the business now, and options tend to be homogenous. Companies don’t look at the true cost of changing carriers.

What should employers look for in a health insurance carrier?

They should look at the price point and the availability of services. One universal truth is that health care is local. Looking at the provider directory may not provide solutions. Look for a company that wants to work with you over the long haul. This opens the door to develop that multi-year or long-term approach. Too many people just say, ‘Here’s the low rate this year; it’s time to move.’ Disruption adds to the cost of changing carriers. Once you change carriers four or five times, you’ve gone full circle and not accomplished anything positive for your employees.

In the real estate market everyone looks at location, location, location. In the health insurance business, people have a tendency to be very short-sighted and look at rate, rate and rate. Health insurance is a product for which you truly get what you pay.

Besides price, what should employers consider when looking at health insurance?

The basics are the price, the benefits and the network that employers have a tendency to focus on. After those three factors, you should consider the true level of customer service, level of employee education, hands-on service and no-cost, value-added services guiding people to healthier decisions. If you only compare the basics, you’ll have a tough time differentiating one carrier from another. Although employees aren’t involved in the decision of where to buy coverage, every employer out there knows that a benefit is no longer a benefit if it’s a ‘hassle.’ I’m talking about picking up a telephone and talking to a person. You need a focused point of contact — those touch points that are truly hands-on, truly person-to-person.

Employers want to do the right thing for their employees. But the amount of information most employees know about their health insurance is printed on their ID card. That’s about as in-depth as they go until they need it.

How can employers educate their employees about their health insurance?

Let’s ask the right question: What do my employees really need versus what do they want? Most employers rarely ask. Now you’re providing value, so give them the opportunity to learn about what they’ve got. The annual enrollment period is a great time to educate and inform employees about their benefits. Unfortunately, a lot of employers just get an application filled out. But what does a new application mean to an employee and his or her family?

One idea that works well is to invite the employees’ spouses in for these meetings. Why? Seventy-seven percent of health care decisions are made by women. So involve the spouses.

What is the benefit of educating employees about the plan?

The biggest benefit is truly imparting the knowledge of the cost of medical care and the value of the insurance plan the employer is providing to them. Most employees don’t understand how much it costs. All they know is how much is being taken out of their check.

The other thing they know about the cost of their health insurance is the co-pay. If their doctor’s visit only costs them $20, then why is the company taking so much money out of their account? You have to help them understand their cost is only the tip of the iceberg.

What are some of the factors contributing to high costs?

When you look at the process of pricing health insurance for a company, you look at the demographics of the group: age, sex, family participation in the group, the plan design they are interested in, where they are located, the health of the group, whether it’s through claims experience or health histories. Then the bargaining starts. The risk is determined and benefits may be modified.

How can employers marginalize those factors?

I’m a big believer in personal responsibility. People want to work for employers that take the time, not just in an enrollment meeting, but with a truly educational total approach to employment and benefits. Large or small, the companies people want to work for are ones that give employees the tools to make their own decisions. If you give people responsibility, eight out of 10 of those people are going to rise to that occasion and many exceed it.

In the health insurance business, the best way to bring down costs is by being healthy. That is why preventive care and wellness programs are so important and need to be considered.

Albert Ertel is COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta

Do employers want to stop offering health insurance? Most employers provide health insurance for the same reasons today as they will in the future: it’s an employee benefit that hopefully sets them apart from their competition to obtain and retain qualified personnel.

Health care reform may change the buying process drastically. Employers will not be required by law to offer health insurance, but they face financial penalties if they decline to do so.

“There will be difficult decisions ahead,” says Albert Ertel, COO of Alliant Health Plans. “That decision-making process needs to be a team effort between the employer and their professional insurance agent or consultant. It’s an integral part of the value provided. Who else will have the employer’s back during this time of transition?”

Smart Business spoke with Ertel about why professional insurance agents are a vital part of the new health care landscape.

Why are insurance agents important?

Health care reform may force a dramatic change in how health insurance is to be purchased. One facet being discussed is the health insurance exchange: national or state exchanges. If the Supreme Court ultimately decides on the insurance mandate, every individual will be required to obtain his or her own coverage. Employer-sponsored plans qualify. But to collect any subsidies, individuals must purchase coverage through an exchange. Can this be done effectively over the Internet without assistance?

Consider some examples. You want to travel from A to B. Purchasing airline tickets is a single, simple transaction. You can purchase car insurance the same way. It is simple and a single transaction. You want to insure your car against damage. It’s easy until you have a claim. Even though most folks don’t have a claim but once every 10 years, an agent is the preferable source of purchase and service.

When shifting the discussion to health insurance, transactions multiply. It gets complicated: premium, plan design, provider network, etc.; claims from doctors, hospitals, labs, etc. So many transactions must be paid. What is the responsibility of the patient versus that of the insurance company? Getting answers can be rough. Much of a health insurance agent’s work starts after a policy has been implemented and the insured has received care.

What does the role of agent entail?

A typical approach to the human resources department used to be ‘I believe I can bring you a better benefit program at a lower cost than you have today.’ The agent would conduct a survey of the current program that is in place: benefits, rates, claims experience, known health issues, location of employees. Are employees all in Georgia, or scattered throughout the country? Are you fully insured and large enough to consider self-insuring?

Today it is different. A longer-term approach must be considered. Employers are looking for wellness, disease management and additional ways to hold down costs. Employers need to review their contribution strategies. How much is appropriate for employees to share in the costs? Should they increase the deductibles and/or co-pays? What about health-saving accounts (HSA) or health reimbursement accounts (HRA)? An agent can offer a cost/benefit analysis for numerous options being considered. The value proposition gets started once he has the information. Once a game plan has been set in place, it’s time to ‘shop,’ which means requesting programs from different insurance companies and producing an analysis to determine the best product.

Service cannot be taken for granted. A trusted agent could also assist with educating employees and dependents.

Why is that education necessary?

HR departments take on many roles and health insurance can be a drain on employees. Working with a professional agent may provide additional resources without increasing staff. Agents offer dedicated expertise and assistance without increasing payroll. They have a role and responsibility to assist employees’ understanding of the health coverages offered at the company.

Employees receive an ID card and a certificate of coverage or summary of benefits. Most people do not read the certificate until after they have sought and received care or treatment. So many employees/patients work the system backwards. A physician order does not guarantee the service is covered under the plan. Insurance is a contract for specific benefits at specified levels of coverage. It’s meant to provide financial support after illness or injury. Today, plans must include preventive care and wellness. It adds new costs intent on getting people to their physician sooner rather than later, because prevention tends to be less expensive over the long haul. Creating a complete message is important; prevention, wellness, diet and exercise can be offered through the employer with the right help.

How are these agents compensated?

Health care reform is creating static. A great misnomer among congressional delegates is that health insurance agents are paid 15 to 20 percent of premiums collected. That is such a fallacy. Agents can be, and many are, a tremendous resource and compensation needs to be fair and reasonable. Health care reform may make it very tough for carriers to compensate agents. New rules will require insurance carriers to pay out 80 or 85 cents of every premium dollar for medical costs. After administrative costs, taxes and a small margin it leaves a very small amount to compensate or pay for agent services. As noted previously, exchanges will be an option for the purchase of health insurance. Every employer should have the option of professional expertise without added costs. Health insurance isn’t just a financial decision. Its impact goes home to the family.

Albert Ertel is COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta

Have you ever wondered exactly how insurance companies determine the premium you pay? It’s a complicated process; many factors are taken into account.

Health insurance premiums paid by businesses are as much a human resources issue as a financial issue, says Albert Ertel, COO of Alliant Health Plans. “It’s a decision requiring balance. You have to determine if the benefits that HR wants to provide fit the budget,” he says.

Smart Business spoke with Ertel about how insurance companies determine your premium and how health care reform may affect the price you pay.

What do insurance companies look for when determining a premium?

The insurance company is looking for sufficient premiums to pay for estimated claims during the upcoming policy year. It is an educated estimate, using a simple formula that requires very complicated input. Underwriting and pricing is as much an art as it is a science. Insurance companies try to use past claims history as a predictor of the future. The goal is to develop a premium rate to cover future medical expenses and administrative costs.

Whether it is health, homeowner’s or auto insurance, there are two pieces of any premium dollar: the cost of doing business (administrative costs) and claims paid. The difference is that health insurance companies process a lot of claims — many low cost, high volume and others very low utilization but very high cost. ‘Normal’ utilization can be predicted for most groups. A small percentage of individuals will generate 70 percent to 80 percent of medical claims. Will those be one time or ongoing?

Why are premiums trending upward at the moment?

Premiums have outpaced wages for a number of years. Recently, the government has weighed in with a new law that may only exacerbate the increases. The Patient Protection Act has mandated new benefits, which focus on prevention and wellness. These benefits have to be paid for by the insurance companies at 100 percent with no cost sharing.

A few insurance carriers have been using health care reform as a reason to increase premiums, whether warranted or not. The real reason is fear of the unknown. Note, insurance pays for eligible treatments and nothing is holding down medical cost increases, yet.

What are the steps in the premium determination process?

First, the insurance company analyses the prior two to three years of claims and compares it to covered lives. Then they apply medical trend, which takes into consideration medical inflation, technology improvements, utilization, new treatments and drugs.

Second, they see where the group is located and compare this to available care in that region and adjust accordingly. For example, if new services become available in an area it will affect cost of coverage. New technology is expensive and needs to be paid for; supply and demand economics does not work in health care, as greater supply leads to greater utilization and costs. One of the variables when predicting premiums, or predicting medical costs, may be a new ‘miracle drug’ a patient just has to have. Or the local hospital bought a new CT scanner and it will be utilized.

What other factors go into pricing?

The size of the company, its industry and the age, sex and health status of eligible individuals, where they are located and the plan of benefits chosen are all considered. Lifestyles tend to be different between workers in varying industries. Those differences could include education, recreational activities, nutrition, and smoking and drinking habits. The age and sex of the people within the group has a lot of influence in the numbers. Young males tend to be healthier, young females are risk adjusted for potential maternity claims. Geography comes into play and may be coincidental to industry. Northwest Georgia is the ‘Carpet Capital’ of the world and jobs tend to be in a factory. That area has a high percentage of smokers. Also, consider the higher cost of healthy food. Atlanta has a much higher concentration of ‘white-collar’ jobs. Education levels may be higher and health awareness is commonplace.

Location also comes into play when considering available services. Availability of specialty services and referral patterns has to be considered when pricing health coverages. Known health concerns within a ‘group’ can have a significant impact on premium rates. An insurance carrier must price any risk to cover known claims; current cancer treatment, end stage renal disease or uncontrolled diabetes with multiple complications are conditions that could impact premiums. Finally, the benefits are considered; deductibles, co-pays and out of pockets affect required premiums.

Does anything else impact pricing?

Administrative costs will be added to the potential cost of claims. Those costs include customer service, underwriting, sales, claims processing, printing, postage, Internet and website maintenance, agent commissions and taxes. These costs cover the insurance company’s overhead or cost of doing business. These are generally lower than one would expect. Overall general and administrative costs run around 14 percent to 20 percent depending on the size of the covered group.

What can companies expect in the future?

Costs will continue to rise until we all make a stand; we need to improve our lifestyle choices today. Companies and insurers alike should be pushing employee awareness to improve prevention, wellness and personal responsibility. It’s fairly easy — less care equals less cost. And insurance should be there for the unexpected illness or injury.

Albert Ertel is COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta

Whether you call it health care reform or health insurance reform, we are not addressing the cost of care.

“Cost reductions will come from greater efficiencies and improving the health and well-being of the population, not across-the-board cuts,” says Albert Ertel, chief operating officer of Alliant Health Plans.

There are several ways health plans are working to improve patient outcomes. One idea that is creating a lot of buzz is Accountable Care Organizations, or ACOs — partnerships between health care providers, physicians and hospitals that are being designed to identify best practices, improve patient outcomes and ultimately reduce costs.

Smart Business spoke with Ertel about how health plans need to be working together with providers to improve patients’ health and impact costs.

Why is there an increased focus on accountability?

Health care reform conversations among providers are centering on ACOs. Hospitals and physicians are exploring ACOs as possible strategies. The whole idea is to improve a person’s care by getting all of his or her providers on the same page and accountable for the outcomes. Accountability is achieved by determining a starting point and then measuring future results. The easy part of accountability is to follow the dollar. What is the readmission rate at a specific hospital and who were the admitting physicians? For example, if a Medicare patient is readmitted for the same diagnosis within 30 days, Medicare will not pay the hospital for that second hospitalization. Today, that event is fragmented between the physician and hospital. What if they both were responsible and paid accordingly for that patient to be well? Today, many payments are transaction-based; more tests equals more payments.

You could see hospitals look to re-evaluate physicians with admitting privileges. Accountability is as valid as the chain of information and data captured. Historically health plans have had the data from claims. But claims data is only part of the ‘new normal.’

What type of information is shared between the health plan and physician?

All encounters need to be captured. Logically, the ideal would be a single source where you can access information related to diagnoses, treatments and prescriptions. Currently, that place is usually in the physician’s notes. How would a specialist gain access to the primary care doctor’s history? Unless the physicians and other providers in that area are ‘clinically integrated’ it is almost impossible without a physical handoff of the patient’s records. Many physicians have electronic medical records (EMR) but many systems do not talk to one another. Technology should be available soon to fill this gap.

In what other ways do these partnerships emphasize accountability?

Clinical improvements will continue. But today, providers are paid on a fee-for-service basis; more treatment equals more money. Getting ‘a lot’ of care does not necessarily equate to ‘best of care.’ ACOs are defining ‘pay-for-performance’ models. Hopefully, we can move from a transactional-based payment methodology to episodes of care where physicians are rewarded for keeping patients healthy — and use the most effective resources.

Managed care has been using what I call ‘mother may I’ medicine. A physician would ask the payer permission for many treatments. It started as ‘cost-containment’ and included pre-certification or prior authorization. Health care, or should I say health care information, is evolving. As best practices are identified, the challenge will be getting information into the hands of physicians in ‘real time.’

Will ACOs catch on with health care providers?

Hospitals in Georgia are discussing ACOs today. Physicians are motivated because it will help their patients. Also, physicians are finding it difficult to practice medicine due to the cost of running their business. Many small physician offices are in survival mode.

How can they ‘band together’ to gain efficiencies and share information? Physician groups large and small will be having similar discussions about how they can each share in the huge volume of information that is generated about the population they serve, what services are available and what are needed, and how they can appropriately share the millions paid in health care dollars.

How are ACOs formed?

It sounds simple, but it isn’t. Physicians and a local hospital must first agree to clinically integrate, share their information, agree on best practices, measure results and divide monies appropriately. Add federal and state laws, regulations and rules, and it equates to ‘herding cats in a hail storm.’ Once clinical integration is in place, the providers agree to become an ACO and accept a level of risk. The best practices agreed upon begin to unfold and positively influence the population the ACO serves. But remember — health care is local and providers take responsibility for their communities.

How will these changes affect pricing and coverage?

A health plan’s goal is to cover as many lives as it can by keeping prices as low as possible. We look at ACOs as a real strategy to ‘team’ with providers and share risk. Information is the key. Capturing data and relating it to the local demographics is vitally important.

Alliant Health Plans was founded by providers. We have a keen understanding of the health insurance cycle and the impact that uninsureds have on a health care community. Lower premiums are a direct result of lower health care costs. The possibility of sharing with providers the goal of keeping the community healthy could be a game changer. One of the best paying patients is one than never needs to seek care.

Albert Ertel is COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta
Sunday, 26 December 2010 19:00

How wellness programs can benefit employers

Although the ripples of health care reform are looming, 2011 is the potential beginning of a new era of the delivery of health care. Albert Ertel, chief operating officer of Alliant Health Plans, says employers as well as individual employees are facing tremendous responsibilities.

“When it comes down to it, the key to reducing the overall cost of care will come from reducing the overall necessity of care,” Ertel says. “The only way to do that is to move the needle toward healthier people.”

Smart Business spoke with Ertel about how wellness programs can benefit employers, and how to get employees to participate happily.

Why are wellness initiatives important?

No matter how much the government pushes it, the responsibility will land with individuals. Employers have an incentive to have healthier employees. Healthier employees are more productive.

Ultimately it benefits us, the insurance company, too, that is if we are paying fewer claims on ‘healthier’ people. That will allow us to hold down price increases in the future. That’s the domino effect: healthier people equal fewer claims. Fewer claims equal lower premiums. Lower premiums equal more people getting coverage with lower rates.

How can employers get employees to participate?

Our program, AlliantSense, works very much like a frequent flier program. You get points for doing the things you should be doing, preventing illness and improving your overall health and wellness. Points are awarded for getting your annual physical. If you get it in the month of your birthday, there’s a bonus.

It’s our way to try to create incentives for people to practice a healthier lifestyle. It can get employees in the habit of having an annual physical, losing weight or maintaining a healthy weight, participating in scheduled runs or walks, or getting a mammogram or colonoscopy.

Also, if a generic drug is available, points are awarded for picking it over the name-brand drug. It’s cheaper, no less effective and they get points. It helps with compliance. If the decision is a $10 drug versus a $50 drug, they’re going to take the generic drug. Especially if money’s tight, some people will say ‘I don’t have the money for it this month’ and they won’t get their prescription filled. That’s just wrong.

This program is not just wellness; it’s a prevention plan as well. It helps manage chronic diseases, too. It provides education and potential alternatives to care, while encouraging employees to get moving, eat right and exercise.

Who are the health experts involved in the program?

There are many wellness programs. Some bring in an outside vendor or consultant. In some cases, this could potentially compete with an individual’s physician. AlliantSense does not. The doctor/patient relationship is worth protecting. By design, and the way it works, our program pushes people back to their physician for guidance and advice that is specific and directed to the individual patient.

That’s important, because most people don’t drastically change their lifestyle unless there is some kind of trigger. For example, someone who has been smoking for 20 years won’t decide to quit unless this person or someone close to him or her has a ‘health incident’ — it’s the proverbial walk-up call. For that message to be heard, it needs to come from the family physician. The family physician is one of the most trusted resources for health guidance and information.

How do you get people on board?

Implementation is not the tough part. The tough aspect is the education — making people aware of the program and keeping it ongoing. That is probably the hardest part of any wellness program. It can be the same as joining a health club in January. The health club is built around the fact that 70 percent of the people are only going to use it 20 to 30 times a year. You need to give your employees a reason to participate. The education should be ongoing on a monthly and quarterly basis. Healthy competition among peers is one of the greatest ways to get things moving. Get creative. We’ve had companies measure and publicize the points in their break room. They formed a ‘Tons of Fun’ club, to keep track of the most points for losing weight. Wellness programs can become a social phenomenon.

It’s also helping us with brand loyalty. People start looking for it; they log into their personal health record, or PHR, for status. Some look for additional ways to earn points. They know they can get points for running in a race, so they try to find one happening this weekend. It helps reinforce an active lifestyle even outside of work.

What does a company need to know before getting started?

Many companies add wellness programs, and are charged for it. That’s something that sets us apart, because it’s part of what Alliant offers to every one of our insured groups. We’re banking on the fact that, if we get enough people involved, it will perpetuate healthy behavior among the people we cover, which will keep the pricing down.

Other alternatives can have employers bringing in a vendor to ‘take specimens’ and measure employee health status with ‘lifestyle questionnaires.’ Once they have that information, they have to do something with it — but what? You can tell your employees to go out and lose weight, exercise and change their eating habits for better nutrition, but somebody has to keep encouraging them. We found incentives work.

And the relationship between a patient and his or her personal physician is a ‘bond.’ AlliantSense ‘pushes’ individuals back to their personal physician. It is important for Alliant members to practice a healthy lifestyle and prevent illness as best they can. It is ultimately up to the individual.

Albert Ertel is the COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta
Tuesday, 23 February 2010 19:00

Staying competitive

Rising health care costs are putting more and more pressure on employers every year. Providing a desirable plan has become an enormous expense, but companies still need to offer health insurance benefits to stay competitive and recruit.

“Health insurance is no longer an employee benefit; it’s a cost of doing business,” says Albert Ertel, COO of Alliant Health Plans. “You have employers trying to find a balance between what they can afford and what the employees desire.”

Smart Business learned more from Ertel about how employers can find that balance.

What options do they have to keep the costs manageable while also offering a quality benefits program?

One of the mistakes employers make is looking at their health plans on a year-to-year basis instead of using a long-term, multi-year approach. There used to be 10 to 15 insurance companies employers could get quotes from that would compete for their business. There are only a handful of competitors in the business now, and options tend to be homogenous. Companies don’t look at the true cost of changing carriers.

What should employers look for in a health insurance carrier?

They should look at the price point and the availability of services. One universal truth is that health care is local. Looking at the provider directory may not provide solutions. Look for a company that wants to work with you over the long haul. This opens the door to develop that multi-year or long-term approach. Too many people just say, ‘Here’s the low rate this year; it’s time to move.’ Disruption adds to the cost of changing carriers. Once you change carriers four or five times, you’ve gone full circle and not accomplished anything positive for your employees.

In the real estate market everyone looks at location, location, location. In the health insurance business, people have a tendency to be very short-sighted and look at rate, rate and rate. Health insurance is a product for which you truly get what you pay.

Besides price, what should employers consider when looking at health insurance?

The basics are the price, the benefits and the network that employers have a tendency to focus on. After those three factors, you should consider the true level of customer service, level of employee education, hands-on service and no-cost, value-added services guiding people to healthier decisions. If you only compare the basics, you’ll have a tough time differentiating one carrier from another. Although employees aren’t involved in the decision of where to buy coverage, every employer out there knows that a benefit is no longer a benefit if it’s a ‘hassle.’ I’m talking about picking up a telephone and talking to a person. You need a focused point of contact — those touch points that are truly hands-on, truly person-to-person.

Employers want to do the right thing for their employees. But the amount of information most employees know about their health insurance is printed on their ID card. That’s about as in-depth as they go until they need it.

How can employers educate their employees about their health insurance?

Let’s ask the right question: What do my employees really need versus what do they want? Most employers rarely ask. Now you’re providing value, so give them the opportunity to learn about what they’ve got. The annual enrollment period is a great time to educate and inform employees about their benefits. Unfortunately, a lot of employers just get an application filled out. But what does a new application mean to an employee and his or her family?

One idea that works well is to invite the employees’ spouses in for these meetings. Why? Seventy-seven percent of health care decisions are made by women. So involve the spouses.

What is the benefit of educating employees about the plan?

The biggest benefit is truly imparting the knowledge of the cost of medical care and the value of the insurance plan the employer is providing to them. Most employees don’t understand how much it costs. All they know is how much is being taken out of their check.

The other thing they know about the cost of their health insurance is the co-pay. If their doctor’s visit only costs them $20, then why is the company taking so much money out of their account? You have to help them understand their cost is only the tip of the iceberg.

What are some of the factors contributing to high costs?

When you look at the process of pricing health insurance for a company, you look at the demographics of the group: age, sex, family participation in the group, the plan design they are interested in, where they are located, the health of the group, whether it’s through claims experience or health histories. Then the bargaining starts. The risk is determined and benefits may be modified.

How can employers marginalize those factors?

I’m a big believer in personal responsibility. People want to work for employers that take the time, not just in an enrollment meeting, but with a truly educational total approach to employment and benefits. Large or small, the companies people want to work for are ones that give employees the tools to make their own decisions. If you give people responsibility, eight out of 10 of those people are going to rise to that occasion and many exceed it.

In the health insurance business, the best way to bring down costs is by being healthy. That is why preventive care and wellness programs are so important and need to be considered.

Albert Ertel is the COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta

Many people believe the key to employee wellness is education. The idea is that if people were better informed about their own health, they could take more responsibility for it. This train of thought has led to the creation of personal health records and their subsequent increase in use.

“One of the easiest ways to pass that information around to the appropriate parties is through the technology of personal health records,” says Albert Ertel, chief operating officer of Alliant Health Plans. “It’s not meant to be big brother. It’s truly meant to give people access to that information in one place.”

Smart Business spoke with Ertel about how personal health records are changing health care.

What is a personal health record, and how can it help?

A PHR is a tool which enables individuals to play a much more active role in managing their health care. Whether you are active and healthy, managing a chronic condition, or caring for children or an elderly loved one, PHRs can help you manage all your health-related information.

A PHR permits an individual to securely gather, store, manage and share their own health information with whomever they choose: physicians, family members, hospitals. PHRs allow users to accomplish many tasks, like track medications, view insurance plan information including prescription drug benefits, view and update family medical and treatment history, view recently filled prescriptions, store important health care documents like living wills, view recent office history, and store physician contact information.

Members can go online and print out the information, or input all the typical information they are going to be asked when they go to a doctor’s office and are handed ‘the clipboard.’ You get a chance to fill out that information when you are thinking about it, not when you are under the stress of trying to get in to see a specialist.

PHRs are portable, too. So if you’re on a vacation and have an emergency, you can go online anywhere and pull up that information and your health history.

What types of PHRs are there?

You can get generic PHRs — they are equivalent to an electronic file cabinet. The individual has to manually input all that information, even scanning his or her own lab results. It’s essentially a personal vault. It doesn’t update information automatically, so the individual is required to keep it up to date. Unless someone is completely tech-savvy and willing to stay up with it, the value proposition is limited.

However, a personal health record that is provided by your health insurance carrier will capture not only claims information but health care encounter information as well. That means the PHR will include not just the treatment the carrier paid for — it may include information the doctors provide to validate treatments and to prove medical necessity. It should also include the prescriptions previously paid for by the drug benefit payer (usually included in the medical coverage) as well as the diagnosis as provided by the physician and any lab results.

How are PHRs accessed?

PHRs should be permission-based because it truly is personal health information. That means the carrier captures all the information, but the insured party has to give permission to the appropriate parties — like doctors — to access and disseminate that information.

One way PHRs can be accessed is through a Web portal. For example, PHRAnywhere is a medical information storage bank that also offers an individual the ability to carry a pocket card (smartcard), which provides physicians and other health care providers access to all this information through the use of a key code provided by the insured.

Assuming the insured individuals give permission, their doctors, both primary care and specialists, will have access to all the information. Any emergency room physician across the country can access the records; they only need access to the Internet.

How can insurance providers help people use these records?

Some carriers provide incentives for employees to lose weight, exercise, use generic drugs and get primary care such as physicals, colonoscopies and mammograms. Some things are captured during the claims system; others are self-reported.

For example, Alliant provides incentives for people to keep up to date with information online. To get points in their wellness program, we’re asking them to provide updates via their PHR versus faxing in a form or something like that. It’s pushing people to use technology in ways that will pay off in the future.

How does it benefit business owners to look for carriers with these personal health records?

The more people take responsibility for their health and are doing things with a positive approach to improve or get better, or at least be aware, you’re going to see less inappropriate care and the excesses are going to be reduced. Any time people need less care, costs are going to go down.

An employee involved in keeping up his or her PHR tends to be more involved with his or her health. If an employee is paying close attention to her health, she will know when it’s time to get a mammogram, which could lead to early detection of breast cancer. If you catch breast cancer early enough and you perform a lumpectomy instead of a radical mastectomy, the savings are huge — to say nothing of the emotional aspect that a woman and her family goes through with a mastectomy. It all adds up pretty quickly.

Albert Ertel is the COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta

No matter where you turn, people are talking about health care reform or health insurance reform. The big question on most employers’ minds is how the recently passed health care legislation will affect their businesses.

“Employers are asking a lot of questions and not getting any concrete answers,” says Albert Ertel, chief operating officer of Alliant Health Plans.

The uncertainty has made it difficult for employers to develop a plan of action, but Ertel says staying informed will help keep them prepared for whatever happens.

Smart Business spoke with Ertel about how unintended consequences of health care reform could affect cost and quality of care and what you can do about it.

What has been employer feedback on health care reform so far?

The 2,000-plus pages within the Patient Protection and Affordable Care Act (PPACA) is the law of the land, but there is no one place employers can go to get answers. The questions employers have been asking about the PPACA are designed to shed some light on some simple but very important issues that may impact their business both immediately and in the future.

  • Do I need to change my health insurance plan and when?
  • What will it do to the rates I am paying?
  • How will it affect my employees and their families?

Fear of the unknown and contradictory government statements have led some to false beliefs. Some people have been acting under the assumption that if they have a plan in place today, they need not do anything. That is not necessarily the truth.

What are some potential unintended consequences of the reforms?

The regulations that are slowly dribbling out will generate rules that may end up having a number of unintended consequences. They include but are not limited to the following:

  • Increased insurance costs
  • Increased utilization of emergency rooms
  • Exacerbation of physician shortages
  • Government focus on cost cutting that affects access and quality
  • Reduced R&D (lower margins will lead to cuts in all areas of health care)
  • Private insurers having to follow government guidelines
  • Increased ‘medical tourism’ — sending patients overseas for elective procedures

How are those consequences affecting the cost and quality of health care for employers?

First, enhanced benefits are not free. Someone has to pay for the new ‘well care’ benefits added by the new legislation.

Second, adverse selection adds unknown and potentially tremendous risk. Several pundits are criticizing insurance carriers for increasing premiums today to prepare for the anticipated costs that will follow. One example is that employers must provide health insurance to dependents up to age 26. And it’s important to note that required proof of qualified eligibility is non-existent. Also, coverage must include payment for any pre-existing conditions. The additional risk adds up quickly and must be passed on through increasing premiums.

Third, the whole dynamic of purchasing health insurance is changing. Will employers look to their professional agent or consultant or go directly to the ‘exchange’? Health insurance is not a commodity. It is a contract for payment of health care services that are medically necessary, appropriate and completed in an appropriate setting. Who will be setting the new rules? Today you can work with your carrier. Due to cost constraints, it may all move online. Medical treatments and the consequential billing are already very complex and will get even more complex. I am afraid the government will dictate the rules for eligible services and set reimbursements. The role of the professional agent or consultant will change. Will they continue to assist with purchasing decisions as well as the service and support many provide to employers today?

What are some solutions, and how can they be implemented?

Knowing and understanding what is happening is so important today. Employers must stay informed. But that will not be easy. Things are moving very fast. Even though the full scope of the law is not to go into effect until 2014, there is a lot happening right now. For example, starting Sept. 23, (six months after the law was signed) those dependents up to age 26 must be offered coverage. Also starting Sept. 23, health plans can no longer have annual or lifetime limits within their benefit plans.

What can be expected in the future?

The law included more than 2,000 pages of text. The regulations are estimated to exceed three million pages. The regulation defining an eligible dependent child exceeds 120 pages of text. It should be quite clear numerous changes and a number of surprises are expected. All benefit plans, insurance companies and employers currently self-insuring their benefits will be required to pay at least 80 percent or 85 percent of equivalent premiums towards medical costs. Medical costs or claims may include direct payments for services and services ‘expected’ to improve the health of covered lives. This MLR (medical loss ratio) rule will apply to all insurance companies and employers self-insuring their benefit plan. As it reads today, any money available for claims not paid out during the policy year must be distributed as a rebate to the insureds of the plan and not back to the employer. Although promised to be available by July 1, the MLR regulations have not been released. This provision becomes effective Jan. 1, 2011.

Health care reform or health insurance reform, whatever you want to call it, will affect us all: large business, small business and individuals. And I do not see costs going down.

Albert Ertel is the COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta

With the health care industry’s current state of flux, many companies are exploring the value proposition between self-funding their health plan versus a fully insured program.

Albert Ertel, chief operating officer of Alliant Health Plans, says there are similarities between self-funding and the traditional fully insured route, but employers should know the differences and educate themselves before making a decision.

“The basic functions are the same. It boils down to the appetite for risk the employer has,” he says.

Smart Business spoke with Ertel about how to determine which type of insurance is right for your organization.

What are the differences between a self-funded and fully insured plan?

The major differences between these options can be boiled down to risk and services included. In self-insurance, the employer becomes the health insurance ‘company.’ The employer is insuring its employees and their families. Providing health care for this population may be difficult to quantify. Additional coverage or reinsurance is available to insure against potential catastrophic losses.

In the fully insured world, the insurance company takes financial responsibility to pay eligible health care expenses and administrative expenses for that population. The insurance company takes the risk and responsibility to do it all: administration, eligibility, enrollment, ID cards, claim payment, customer service, coordinate care, etc.

In self-insurance you are the plan, the administrator and coordinator. You hire additional experts on your behalf to get it done. Potential savings comes from lower cost of administration. Self-funded plans are not subject to state insurance laws or taxes. However, as federal health care reform ramps up, that flexibility may be disappearing.

What does ‘unbundling’ services mean and how does it affect self-funded insurance?

Most services are included as a ‘bundle’ in fully insured plans. The insurance company is at risk, so medical management, care coordination and a basic wellness program are inclusive. By unbundling, self-insuring companies determine which services they will use in their plan. At a bare minimum, they are going to need a TPA (third-party administrator), provider network, and case management. Adding other services like wellness programs or disease management is up to the employer. Employers may consider other technology-based services offered in many fully insured programs including PHR (personal health record) and Internet access to claims and potential treatment costs (transparency).

Would employees notice a change in coverage if their plan changes?

In most cases, there should be little differences between fully insured programs and self-funding when comparing the ‘core services’ and paying claims for eligible health care. Fully insured plans will offer greater benefits and services. For example, Alliant has an incentive program to improve wellness. We provide a choice of incentives like gift cards to get covered members to use their wellness benefits, get their annual physical, stop smoking, and exercise. Self-funding companies may or may not want to add this additional expense. Once a company determines its employee benefit philosophy and tolerance for risk, each additional ‘value-added’ service will need to go through a cost-benefit analysis.

What are the cost differences?

An employer must understand that ‘a claim is a claim.’ If you look at the same population with equal health concerns, the medical care will be comparable. In self-funding, that care is paid for in two parts: administration (along with any value-added services), which is billed monthly, and medical services, which are paid as they occur. In self-funding, if employees don’t seek care, there is no money going out the door. Let’s say there is a million dollars accrued in a claim fund for the next year. If claims never happen, those dollars are saved for future use by the employer. Imagine a dollar bill representing your premium. It has two parts, fixed cost and claims. In a fully insured world, you pay that full dollar every month. In the self-funded world, you pay 15 to 20 percent for administrative costs to the TPA and hold onto the balance to use for claims, At the end of the year any portion of that dollar left, you keep. Yet if claims exceed expectations, then the excess costs will have to be absorbed. Self-funding is risk-reward. Your exposure is limited to the ‘whole dollar’ when fully insured.

How are self-funded plans administered?

Any insurance adheres to the law of large numbers. Whether it is self-funding or otherwise, you have to get as many people enrolled as you can. It lowers cost by spreading risk and eliminating potential adverse selection.

Self-funding requires you to define the benefits and services covered, eligibility, participating providers and administration. It usually begs the assistance of a professional adviser, agent or consultant. Most employers hire a TPA and expect that TPA to do all the things necessary to make a self-funded program work. But, ultimately, the financial and fiduciary responsibility lands on the employer.

How can executives determine which kind of plan is right for their company?

Many employers believe their work force is healthier than it really is. That may lead many mid-size companies to take the risk. In addition to the financial risk of providing health benefits, an employer and its executives must understand the fiduciary responsibilities. They must be willing to take on the potential liability for every claim that employees and their dependents have.

Whether an employer decides to self-fund or purchase an insured program, claims that are paid this year have an impact on future costs of coverage. In either case, the choice should not be taken lightly.

Albert Ertel is the COO of Alliant Health Plans. Reach him at (706) 629-8848 or aertel@alliantplans.com.

Published in Atlanta

Wellness programs continue to receive the spotlight as a way to counteract the rising costs of health insurance. But do they? Many experts see wellness programs not as a cure-all but an integral part of a new beginning.

“Promoting healthy lifestyles and positive behavior choices is always a good thing,” says Mark Mixer, vice president for Alliant Health Plans. “It is difficult for employers to realistically gauge the impact it will have on health insurance premiums. The smaller the employer, the more difficult it becomes.”

Smart Business spoke with Mixer about how to tell if a ‘feel-good’ solution makes fiscal sense for your company.

Why are wellness programs becoming prevalent?

The unceasing trend of double-digit increases has employers frustrated, and solutions are elusive at best. Professional insurance advisers are compelled to provide solutions, and many have become advocates of wellness programs. Even the new government mandated benefits will require a wellness component. Employers logically want ROI calculations that show substantially lower costs.

Unfortunately, the excitement is short-lived once employers are told these programs come at an additional cost, above the insurance premium already being paid. Unless the end result of a wellness program will put an immediate and substantial dent in costs, it may be put off. The downside is unrealistic expectations on what wellness programs can truly provide and how they can benefit or enhance an employer’s benefit program.

Do wellness programs benefit employers?

To answer that question, we have to understand the core precept of insurance, which is ‘risk.’ Virtually all midsized to small employers are ‘fully insured,’ which means the premium payment they make effectively ‘transfers’ the risk of health care claims to the insurance company. Larger companies are typically ‘self-funded,’ with the employer paying the claims and assuming the risk (even though the employer may have an insurance company handling the transactions or taking the risk for the catastrophic claims on its behalf).

So here is the critical question: If a wellness program is beneficial, who benefits? In respect to premium costs the answer is the entity taking the risk. Why would an employer (fully insured) add additional costs of a wellness program when the risk — and thus the upside or benefit — is gained by the insurance company? Shouldn’t the company holding the risk pay for such programs, since they will reap much of the upside? Only the insurance company, or a large employer, has enough people to positively bend the cost-curve by employing wellness programs. It is virtually impossible to calculate the savings in a fully insured group (small to midsized company) with any accuracy.

Employers want the best for their employees, and for them to exercise, stop smoking and eat right. But there is a catch. Unless the insurance company is also invested in the results and can measure them, a realistic ROI is impossible to determine. If the carrier is not paying for these results, ask why. This is the logic we used to become the first health insurance company in Georgia to offer an incentive-based wellness program that is paid entirely by us — the insurance carrier — yet all parties have an opportunity to benefit.

What major mistakes do employers make when developing a benefits strategy?

Employers spend their time operating a business and minimal time on benefit planning. Not having a long-term, well-structured benefit strategy is the most common mistake. Another common mistake is not working with an experienced benefit adviser.

Failing to ask employees what they really want is a very common oversight. There is little to no collaboration with the very people employers are trying to retain. Unfortunately, this can’t be done one meeting 30 or even 60 days before the benefit plan’s renewal. For many employees, and employers for that matter, health insurance is perceived as a hassle. Oftentimes this is a result of not providing adequate choices based on employee needs and budgets. For instance, employers might be surprised to find that employees would be happier if they had a less rich, and less costly, medical plan if they gained access to a vision or a long-term disability benefit.

What can employers do to combat rising costs?

Gone forever are the quick fixes that instantly generate substantial savings. The fixes available today are incremental and must be thoughtfully combined. A professional agent or adviser can provide insight on various plan and contribution strategies that you may not have considered. These strategies can help to properly align your benefit goals.

There is much more to employee benefits than health insurance — and unless the company is promoting a wellness ‘culture,’ wellness programs probably won’t have much impact. Yes, we should all promote healthy behavior, but gaining measurable savings on health insurance premium costs needs to be more than negligible.

Our innovative wellness program is entirely incentive-based. This allows us to laser in on behaviors that drive costs down for our whole population and provide our employer clients with positive and rewarding messages for their employees. These incentives act as a motivational tool that keeps employees engaged, and it doesn’t add to costs.

Employee benefit programs are supposed to help employers recruit and retain quality employees. Every decision surrounding benefit planning should accomplish one or both of those objectives. For most employers, health insurance is one of their largest expenses, after payroll. If it doesn’t help you recruit or retain employees, then why spend the time and money? Think of health insurance as the final piece of a larger puzzle and wellness programs as the thread that weaves its way through all the pieces.

Mark Mixer is a vice president for Alliant Health Plans. Reach him at (800) 664-8480 x271 or mmixer@alliantplans.com.

Published in Atlanta