With the turn of the New Year, many Ohioans with group health insurance have been inundated with information regarding new or renewal health insurance policies and may be asking, “What is this information, what does it mean, and what am I supposed to do with it?”
According to a 2009-2010 report by the Kaiser Family Foundation, 53 percent of Ohioans have health insurance through their employer and many have questions about their benefits, especially at the beginning of a calendar year. Employees may be directing these questions to you or your employee benefits managers.
“December is one of the busiest times of the year in terms of sending plan and benefit information to new and existing members, and this often results in a considerably higher call volume to customer service at the beginning of the year,” explains Nancy Markle, vice president of client services at SummaCare, Inc. “Members have a lot of questions regarding how their benefits work, even more so if they have a new benefit plan or have switched to a different carrier.”
Smart Business spoke to Markle about the information your health insurance company is required to provide its enrollees and how to be prepared should you receive these questions.
What information about a policy does your health insurance carrier have to provide?
Group health insurance information requirements are governed by individual states, and the information insurers are required to provide may vary by state. In Ohio, enrollees in a fully insured group plan receive a document called a Certificate of Insurance (COI), and the Ohio Department of Insurance (ODI) has a summary of items that must be included in this document. These items include, but are not limited to, information regarding provisions, appeals, services covered and not covered and policyholders’ rights.
In addition to a Certificate of Insurance, many enrollees will receive a Schedule or Summary of Benefits (SOB). This document details the services covered under the policy and the deductibles, copays and coinsurance amounts associated with these services. If applicable, the SOB will detail this information for both in- and out-of-network coverage.
It is important for both you and enrollees to keep these documents and any addendums to the documents so you have a current and up-to-date record of what your health insurance policy includes and excludes as services can change throughout the year.
What are some health insurance terms that frequently cause confusion?
Many calls that a health insurance company customer service department receives are benefit-related and often just require a little explanation. This often includes defining commonly used industry terms to someone who is not familiar with health insurance lingo.
Two frequently misunderstood terms that go hand-in-hand are deductible and coinsurance. A deductible is a specified dollar amount of covered medical expenses that an enrollee must pay before an insurance policy will pay for its part of the service or treatment.
Coinsurance is the amount an enrollee pays for covered service or treatment after the deductible has been met. Coinsurance is usually based on a percentage. For example, if your policy has an in-network deductible of $1,000 and an in-network coinsurance of 80 percent, the beneficiary must pay $1,000 out-of-pocket before the 80 percent coinsurance for in-network services will apply. This means that the enrollee will pay the contracted rate for any services received that have a coinsurance until the $1,000 deductible is met.
Copayment, or copay, is another term that often causes confusion. A copay is a flat fee an enrollee pays for a covered service or treatment. Common services which may require a copay include office visits and urgent care and/or emergency room visits. Out-of-pocket costs for copays do not always apply toward the deductible, so understanding your plan is important to managing health care costs.
It is important to understand what covered service copays or coinsurance amounts apply to the deductible, as some out-of-pocket costs do not apply to the deductible amount.
Other terms that can be confusing are premium and out-of-pocket maximum. Premium is the amount paid for the overall policy (usually through the employer) on a monthly, quarterly or annual basis. Out-of-pocket maximum refers to the maximum amount of coinsurance or copays an enrollee must pay before your health insurer starts paying 100 percent of covered medical bills. This amount differs from the deductible because it is the maximum dollar amount an enrollee will be required to pay during the benefit year (outside of the premium), and it may or may not include deductible or copays. For example, if your plan has an out-of-pocket maximum of $5,000 and you’ve reached your deductible and have paid eligible copays and coinsurance that total $5,000, your health insurer will pay 100 percent of covered service and treatment costs for services received in-network. This typically occurs when a person is receiving ongoing treatment for a chronic condition, has utilized many of the treatments and services covered under his or her plan or has a large medical expense during a calendar year. Most, if not all, COI documents contain a definition section, so your COI is a good resource to help define other common insurance terms.
How can enrollees make the most of their health insurance benefits?
Enrollees in a group policy can make the most of their benefits by ensuring they understand their plan and the services and treatments that are covered or excluded. To receive benefits at a richer level, seek care from in-network providers and hospitals.
Enrollees should also familiarize themselves with any value-added services. Insurance companies will often offer additional services at little or no-cost, including resources to help you quit smoking, receive diabetic supplies and discounts on vision services and more.
Finally, if beneficiaries find anything confusing, they should contact the insurer for an explanation. Carriers realize that informed members are more satisfied members.
Some information obtained from the Shopper’s Guide to Health Insurance, Ohio Department of Insurance. For more information, visit http://www.insurance.ohio.gov.
Nancy Markle is vice president of client services with SummaCare, Inc. Reach her at firstname.lastname@example.org or (330) 996-8466.
There’s an app for that.
That’s become a popular expression, as mobile phones/computers/smart phones become more commonplace and consumers spend more time with them and become more comfortable using them for a wider range of tasks. Not surprisingly, therefore, health insurers are also looking to mobile applications to enhance the way they connect with their members.
“Mobile platforms present a real opportunity to engage people in ways that haven’t been possible before,” said David Passavant, senior director, Consumer Innovation, UPMC Health Plan. “There are some exciting ventures that will be coming into the market that will supercharge the connection between members and health insurers.”
Smart Business spoke with Passavant about mobile applications and their increasing presence in health insurance.
How can mobile applications impact health insurance?
We are seeing the emergence of the mass adoption of smart phones and smart phone technology. One of the advantages of that is that it gives health insurers new opportunities to engage their members. It’s truly a new channel.
More than 40 percent of U.S. adults now have smart phones, and that number will double in the next three to five years. These phones are essentially mini-computers in the pockets of millions of consumers. Health insurance can be incredibly complex and confusing, and mobile apps are one tool for empowering people to better understand and improve their health and their use of health care
How can members use mobile applications?
To begin with, a mobile app should make it easy to search for health care providers and to contact your insurer. Most health insurers will reach that point some time in 2012. Then we’ll start to see some exciting innovation. Insurers will provide real time updates on claims status, tools to help members better understand the cost and quality of care, customized health tips for each individual, and many types of health tools and trackers. The opportunities these devices provide are endless; we’re just scratching the surface.
Can’t members simply get the same information online?
For many services, that is true. But what health insurers have learned over the years is that most members, for whatever reasons, do not like to interact with their insurers online. It could be that the time commitment is too much, but industrywide, fewer than 20 percent of members tend to use the Internet to conduct their health insurance business. In contrast, a much higher percentage of, say, bank customers choose to do their banking business online.
When companies first started to build websites, they spent very little time on the research and design component. The important thing was to build and launch as quickly as possible. But over time, we learned that the most important part of delivering great technology is taking the time to understand people’s needs and motivations, then to design your site around the needs of your customers.
Hopefully, we can learn from past experience and tread new ground with mobile apps. These devices are fundamentally different from websites for two reasons: one, people always have the devices with them, and, two, because the screens are so small, you have to be incredibly judicious about what you put on them.
How do you see use of these apps evolving?
Initially, they will be used for the basics. Members can be introduced to using the devices to access their personal health record, view claims, locate network providers and pharmacies using the device’s internal global positioning system, and to access a virtual identification card.
Once the use of mobile technology is accepted and members are able to let us know how they want to use it and how it can best fit their needs, we will evolve. Soon it will be possible to include, for example, technology that could collect blood glucose level readings and send them directly to a member’s physician. It’s possible that members might see a value in spending a few minutes while they are, for instance, waiting for a bus, to answer health questions that can be used to earn health incentive points or some other financial incentive from their insurer.
Would use of mobile apps be extended to physicians?
Absolutely, yes. We see these devices as a conduit for empowering the relationship among physician, patient and insurer. For example, a good app will give the member quick access to an accurate and understandable health history that will allow them to maximize their time with their doctor. Because physicians have been so enthusiastic about using smart phones, it makes sense for them to be involved and able to take advantage of these tools. For instance, it’s possible that physicians could be alerted to possible gaps in a patient’s care, such as when that patient is due for a test or screening of some kind.
What do you see as the future for mobile apps in this area?
There is no question that the adoption of smart devices and the maturity of the app marketplace are creating fundamentally different opportunities to engage our membership. This is a redux of the excitement felt at the birth of the Internet. The plans that innovate and win in this space will borrow the best ideas from other industries (travel, banking, retail, gaming) and engage members in ways that websites never could.
DAVID PASSAVANT is senior director, Consumer Innovation, UPMC Health Plan. Contact Passavant at (412) 454-5609.
If all your insurance broker has done is market your health care plan to a half-dozen carriers, you may not be getting your money’s worth, says Steve Freeman, president of USI in San Francisco.
“If you have 100 employees and multiply that by $10,000, the average annual premium is $1 million,” says Freeman. “If you are paying a 5 percent commission, your broker is making $50,000 a year on your account just for negotiating premiums. And there’s not a lot of incentive to work for lower premiums, because, as premiums increase, so does his or her commission.”
Smart Business spoke with Freeman about how to create transparency in broker fees and how to get the most for your money.
Why are broker fees becoming more transparent?
The Accountable Care Act requires a minimum loss ratio of 85 percent, so insurance companies have to spend at least 85 percent of premiums on claims for employers with at least 50 employees. And that cannot include broker compensation. As a result, brokers will have to be more transparent with their services and fees.
What questions should business owners ask their broker to make sure they’re getting the best value?
First, ask, ‘How are you impacting the cost of my medical claims, rather than just shopping it to insurance companies?’ Claims costs drive premium. The broker should also be focused on changing employee behavior to make them become better health care consumers. Suggestions should include ideas around aggressive wellness programs, evaluating different funding alternatives and analyzing the overall health status of the group. The broker should un-bundle your claims to help determine what is driving your price, because, if you can lower your claims, you can lower your premiums. Businesses should understand their claims utilization. For example, they could assess whether their emergency room visits are higher than other groups benchmarked in their region or industry. If so, the broker can target employees using the ER and educate them about how using urgent care instead of the emergency room will cost them and the employer much less.
Your broker should also conduct a large claims analysis. If there are very large claims, are employees utilizing the most cost-effective facilities that have better outcomes? You can also design programs to migrate more employees to facilities with better outcomes and lower costs than, for example, a teaching hospital, whose charges may be double but that have the same outcomes.
Can a small brokerage firm meet these needs?
The one-man or 10-man brokerage is dead. If a broker says, ‘call me for everything,’ or ‘I can take care of all your needs,’ that should be a red flag. Those shops can’t survive because they don’t have the intellectual capital for all of the necessary areas of expertise. Nor do they do the volume of business with insurance companies to get the deals that someone with a large volume of premium with these companies can get.
A larger broker will have ERISA attorneys on staff to advise on compliance issues, a medical director to do clinical reviews, teams that conduct analytic and underwriting work, and individuals doing HR and IT work. Brokers should be the quarterback, with a team behind them that understands compliance, legal, clinical, underwriting and communications. The broker’s job is to understand how to orchestrate that team, not to pretend to have all the answers.
What would you say to business owners who are comfortable with their broker simply shopping their plan?
I would ask what that relationship is worth to them. There are businesses that have a few hundred employees with fully insured plans that budget an increase of 12 percent a year.
If that broker is making a 5 percent commission and you are paying him $100,000 a year, what does he bring to you in value? How much business do you have bring in to make $100,000 in profit? Is your broker worth that revenue? What is he doing to bring your costs down?
Employers think they are just paying the insurance premium, and the broker is part of it, and that it is difficult to influence cost. But brokers actually can influence cost. Insurance companies come out with a 12 percent rate increase knowing that they can be negotiated down to 8 percent. The business owner thinks the broker did a good job getting to 8 percent. But a broker with underwriting and claims experience, before you even get the renewal notice, will tell the insurance company that your renewal should be 5 percent based on the underwriting formula of what you’ve done in the past. The broker should say, ‘Our expectation is that you will come back with a 5 percent rate increase, not 8 percent or 12 percent. But based on facts and claims use, it should be 5 percent.’ There is lot of room for negotiation.
How is the commission system changing with more transparency?
Instead of staying with percentage-based commissions, employer groups are paying a flat fee per year, and the broker compensation is based on the level of service he or she is providing. It is not a function of premium, it is a function of the services that broker is delivering to the firm. The employer group negotiates a flat fee per employee per month, or a flat dollar amount per month for the services it is getting, more like fees that are paid to an accountant or attorney.
The value of the insurance benefits should be evaluated based on results and managing total cost. The more transparent compensation becomes, the more aware clients will become of the services that their brokers are providing, or should be providing.
Steve Freeman is president of USI San Francisco. Reach him at (925) 472-6772 or email@example.com.
Each year, about 40,000 people die in the United States as a result of breast cancer, and more than 232,000 new cases are diagnosed.
But with early detection, the number of deaths could decrease and those who are newly diagnosed would have a better chance at treatment and survival, says Julie Sich, health promotions coordinator for SummaCare Inc.
“Breast cancer is highly treatable if detected in the early stages,” says Sich. “With proper screening done on a regular basis, both men and women diagnosed with breast cancer have a high rate of survival.”
Smart Business spoke with Sich about the importance of early detection and how you, as an employer, can encourage employees to be screened.
How can screening help increase the rate of survival for those with breast cancer?
Based on a person’s history, age, lifestyle and other factors, a doctor may recommend screening for cancer. Because cancer starts at the cellular level and can grow slowly, screening can identify cancers before they become large enough to be physically detected and/or symptoms appear.
What are the risk factors of breast cancer?
The chances of getting breast cancer increase with age, and the majority of women are older than age 60 when diagnosed. A woman’s personal health history can also have an impact — someone who has suffered breast cancer in one breast is more likely to be diagnosed in the other.
Family history also plays a role; if your mother, father, sister or daughter has had an occurrence, especially before age 50, you are at higher risk for the disease. Having other relatives with breast cancer, both on the maternal and paternal sides, also increases your odds. Other risk factors include having a first child later in life, never having children, having a first menstrual period before age 12 and going through menopause after age 55.
While most of these factors cannot be controlled, a person can take steps to control other risk factors by decreasing alcohol consumption, eating healthy foods, staying at a healthy weight and taking part in regular physical activity.
It’s also important to remember that while most people think of breast cancer as a female disease, men can also be diagnosed with breast cancer. Of the more than 232,000 new diagnoses expected in 2011, more than 2,000 of those will be men, so men also need to be screened as part of their routine physicals.
How often should someone be screened?
Self-exams are recommended monthly for women starting in their 20s. Women in their 30s should talk with their physician to determine when it is clinically appropriate to schedule their first mammogram and frequency. Once a woman reaches the age of 40, clinical breast examinations are recommended every one to two years.
Mammograms — which can detect early changes in the breast before they can be felt — are recommended every two years after age 40. However, some women should be screened more often, for example, if they face high risk or have had an abnormal mammogram in the past. Women should talk with their physicians to determine what interval is best for them based on their personal and family histories.
If a mammogram indicates a suspicious area, that test may be followed up with an MRI, ultrasound or biopsy.
Why should employers encourage employees to be screened?
Early detection can result in both direct and indirect benefits for an employer. Screening will give employees peace of mind, improve their health and keep them healthier, happier and more productive at work. In addition, the investment in early detection can result in a huge cost savings to the employer, employee and the insurance company. Direct medical costs are high, lost productivity can be substantial and disability can continue for long periods of time. If cancer is found in the early stages, the resulting costs and time off work will be much smaller than if it had not been detected until later.
Screening costs insurance companies a few hundred dollars and can catch the disease early, while it can still be easily treated. Without screening, the disease may not be discovered until it has advanced, when treatment is much more difficult and costly — potentially hundreds of thousands of dollars.
How can employers encourage employees to be screened?
Employers can help employees stay healthy and identify breast cancer early by making sure that their benefit plans cover cancer prevention and early screening services. Providing adequate coverage can help encourage employees who would otherwise not be screened to get screened. Offering education and incentives can also make employees aware of these services and encourage them to take advantage of them.
Employers should encourage employees to eat well, stop smoking, exercise and drink less as part of an overall approach to health, and incorporate these concepts as part of their wellness activities. Following these guidelines will help employees not only reduce their risk of breast cancer, but other cancers and diseases as well.
Employers can also sponsor activities during Breast Cancer Awareness Month and offer matches to fundraisers for activities such as the Susan G. Komen Race for the Cure.
By providing comprehensive health insurance and creating better access to preventive services, you can not only help your employees stay healthy but reduce turnover and lost productivity, avert direct medical costs and create a reputation as an employer who cares about the health of its employees.
Julie Sich is health promotions coordinator for SummaCare Inc. Reach her at (330) 996-8779 or firstname.lastname@example.org.
As health care premiums continue to rise, business owners are scrambling to keep up with increasing costs.
By understanding the components of your premiums, encouraging your employees to be healthier and working with your broker to identify the best plan for your needs, you could see a significant savings, says Steve Freeman, president of USI in San Francisco.
“There can be a huge savings,” says Freeman. “Employers that implement wellness programs and embrace a culture of health and consumerism, as far as being smart consumers of health care, typically see a savings of 15 to 20 percent. Once you understand how insurance premiums are determined and what the components are, you will be a lot more comfortable taking steps to drive down your premiums.”
Smart Business spoke with Freeman about how health insurance premiums are determined and how you can influence those rates.
How does an insurance company calculate premiums?
The pricing, or rates, are based on the size of the group, industry, the demographics and location of the employees, as well as plan design. Once the insurance company determines these manual rates, they may be adjusted based on prior years’ claims experience, if available.
Next, there are two ways a company is rated. The insurance company has pooled contracts, typically for smaller employers. That means that, regardless of your underlying claims experience, everyone in the pool essentially gets the same rate increase. That pool may not be the best option for you if you have a good claims experience, because you are supporting the groups with bad experience; that is, an employer with employees who make efforts to be healthy is paying the same rates as the employer whose employees are unhealthy.
With a nonpool product, claims experience will influence the rates based on the size of the employer. That experience is more predictable or credible with a group of 500 lives than with a group of 50. That’s because, in a smaller group, you can have drastic peaks and valleys in claims experience. Insurance companies will blend that experience with the manual rates they have identified to level out the peaks and valleys of the premiums.
What are the main factors of premiums?
There are basically three major components that contribute to setting the premium amounts. The largest is claims, which influences premiums dramatically because they are the major element of what insurance companies charge. The second largest is reserves, money held by the insurance company to pay claims filed after a company has terminated its contract. The third is administrative, risk and pooling charges — used to administer claims, print booklets and ID cards, compensate the insurance broker, etc.
What can employers do to help lower costs?
Group plans are now allowing employers to view and analyze their actual claims experience. From there, employers can motivate employees to take care of themselves and, as a result, pay a lower rate.
There is a real emphasis on incentives for people to be more consumer-centric. For example, instead of going to the emergency room, go to an urgent care unit. Instead of brand-name drugs, use generics.
Wellness programs can also help cut costs by encouraging people to eat healthier and exercise. As well, programs can be designed to encourage those with chronic illnesses to take their medications and see their doctor. Screening should also be made available to help identify potential risks, instead of waiting for something as serious as a heart attack or stroke to take action.
More companies are also asking employees to fill out health risk assessments, which gives each individual an overall health score. Many employers offer incentives in exchange for a completed assessment. With those results, the employer can craft a wellness program around the overall health status of its group. For example, if employers have a high prevalence of smokers, or overweight individuals, they can target those areas.
At the end of the day, it’s all about claims management, which drives premiums. If an employer wants to hold costs down, the only way to do that is to get data from its insurance company to understand actual utilization by its employees.
How can a broker assist with the process?
Because every company has different types of products and funding arrangements available to them, a broker can help navigate the different insurance policies available. It’s constantly changing, with new products being rolled out. Unless you are a very large employer who has an in-house risk manager who understands all this, every employer can benefit from a broker to help work through the process.
What would you say to employers who just want to pay their premiums and be done with it?
At the end of the day, your claims costs drive your premiums, regardless of whether you’re fully insured, in a nonpool environment, or in a self-funded plan. If you don’t control your claims utilization via wellness programs and other efforts, you are going to pay more.
The broker adage of, ‘I can get you more benefits at a better rate’ doesn’t work anymore. If you have a group claiming more than average, you’re going to pay a higher rate than the average cost increase because you’re going to have to cover paid claims, reserves and administration, as well as risk charges.
In the end, it’s all about managing risk, with savings as the likely result and reward.
Steve Freeman is president of USI San Francisco. Reach him at (925) 472-6772 or email@example.com.
Much attention has been paid to the American Health Benefit Exchange, the facet of the Affordable Care Act (ACA) designed to help individuals who do not have employer-provided insurance.
The ACA also requires states to utilize Small business Health Options Program (SHOP Exchange). Each state is required to set up these exchanges by Jan. 1, 2014.
“Both the state of Georgia and Georgia businesses will face challenges when it comes to meeting requirements set forth in the ACA, or health care reform law,” says Albert Ertel, COO of Alliant Health Plans.
Smart Business spoke with Ertel about how health care reform is changing how your company purchases health insurance.
How can SHOP exchanges help small businesses with health care costs?
The whole idea of health care reform is to reduce the number of uninsureds by lowering costs. But the law is not addressing the cost of care. It is attacking the cost of insurance, and adding hopefully lower-cost alternatives.
The goal of these exchanges is to create a well-functioning marketplace providing an array of affordable, high-quality health insurance plans for small businesses and their employees.
States can combine individual and small business exchanges — an option with many proponents, because expanding the pool would mean more competition among insurers, which leads to more choice and should result in better pricing for consumers.
Also, companies that purchase insurance through the approved exchanges may be eligible for a sizable health insurance tax credit. The credit is based on an employer’s number of employees and average payroll. If the average payroll is less than $25,000, the employer receives 100 percent of the premium through the tax credit. It declines proportionally as average payroll increases to $50,000, at which point the credit is no longer available.
How will small businesses determine whether they’re eligible to participate in an exchange?
Currently, Georgia law defines ‘small businesses’ as two to 50 employees for insurance purposes. The federal law indicates eligibility is up to 100 employees. This leads to two important questions: Will single entrepreneurs become eligible? And what will Georgia decide?
What issues will the state of Georgia run into when implementing exchanges?
Numerous decisions will have to be made. First, whether the exchange is going to be public, private or a combination — the state of Georgia is working through that now.
There are questions about whether the SHOP exchange, single or multiple, will end up competing with individual exchanges. Also, there will be competition outside of the exchanges. For small business health insurance, price is king.
Additional considerations include a regional approach to the exchange, dividing Georgia into regions, similar to the approach used to enhance competition for Medicaid plans. Or another option is joining states to form a ‘compact.’ Adding multiple states to an exchange is a double-edged sword. With that expansion, you may eliminate competition by turning it over to the big players in those states, because they are already there.
What can states do to help exchanges be successful?
They have to understand what their constituencies are: small and medium-sized businesses. They must decide if they are going to do it on a defined contribution basis, and whether they are going to set up an active or passive exchange. Competition should rule, and my bet is that Georgia will choose a ‘passive’ approach. Most involved in the current committees do not want to add more levels of bureaucracy, which is something they would have to do with an ‘active’ exchange. The state would have to set up a separate committee to approve not only the carriers, but also the plan designs.
One of the keys to the success of the exchange will be the technology that is needed. If the exchange is going to be charged with approving and monitoring whether individuals qualify for the tax credit, there has to be successful transfer of qualifying data sets and information provided by the employer to the exchange. An example is payroll through the IRS. Ensuring qualification may need to occur as often as quarterly, or will be an annual process, so there will have to be an active link to the IRS, Department of Labor, HHS and several state agencies. There are many issues yet to be defined.
What are some potential problems ahead?
Health care reform expands the definition of eligibility for Medicaid. With the increased definition, Georgia may add up to an additional 850,000 to Medicaid. That’s going to be very costly.
Also, as long as it is an employer-sponsored plan, health insurance is deductible as a business expense, allowing employers to continue to provide the insurance. Also, the current system allows employee payroll deductions to be done on a pre-tax basis. That option will be lost in the individual exchange, because individual insurance is purchased with post-tax dollars.
That whole system could be up in the air, because Congress has talked about an option to reduce the deficit, which is to eliminate the tax deduction for employer-based health insurance. You talk about blowing up a system — with unintended consequences. With no incentive for employers to provide insurance, the number of uninsured goes through the roof. If you give the individuals the choice without serious penalties, many would take the ‘insurance’ dollars and fend for themselves. The result is the loss of a significant amount of people in the insurance pool, which hurts these exchanges, because insurance relies on a large pool of covered lives to be successful. I agree changes are needed, but an exchange may be unnecessary when we already have one — it’s called ‘the market.’
Albert Ertel is COO of Alliant Health Plans. Reach him at (706) 629-8848 or firstname.lastname@example.org.
You provide health coverage to your employees, but do you really understand how they use it? And are you helping them get the most out of those benefits while discouraging utilization of services that may not be medically beneficial?
If you’re not, you could be paying for services that are not beneficial, or employees may be costing you more by consuming services that aren’t medically necessary. And that’s where a medical management firm can help you both save money and benefit your employees, says Nancy Sublette, R.N., M.H.A., business change manager, Sr., at HealthLink.
“Employers should explain the services that are available to members, make contact information about those services readily accessible and assure members that information obtained in the provision of services is not shared with the employer,” says Sublette.
Smart Business spoke with Sublette about how engaging a medical management firm can reap rewards for you and your employees.
What is medical management?
Medical management is the name for services within a health plan that evaluate the medical necessity of a procedure or medical service, and help members help themselves.
For example, case management is often employed in catastrophic cases. Following a discharge from the hospital, a member might need support services. The case manager can direct the member to available services and help coordinate those services, providing somebody for that member to reach out to.
However, a lot of people are adverse to someone getting into their personal business, and for that reason, may refuse case management.
How can the medical management firm, and the employer, help the member overcome that resistance?
When nurses are able to talk to the member and the member doesn’t instantly put up a brick wall, they can generally develop a relationship.
On the employer side, communicate that services are available and that the employer does not receive information gathered in the provision of those services. People have concerns, when their health insurance is through their employer, that the employer is going to have access to their medical information, and that is not the case. HIPAA regulations created the rules for keeping information confidential, and it cannot be used for employment decisions.
How can utilizing a medical management firm benefit an employer?
If people know about their disease and how to take care of themselves, and they have support to find the services that they need, then they will have less down time in the workplace. If they are on top of their disease and compliant with their medical treatment plan, they are going to be more productive members of both your staff and of society.
On the medical necessity side, which is the other component of medical management, the advantage for the employer is that anything that is determined not to be medically necessary, and therefore not covered by the health plan, should be seen as a savings.
With all the direct advertising today, people see a new drug and think it will work for them. They see a new service and think it might enhance the quality of their life, and they’re willing to consume the employer’s health insurance dollars to pay for these services.
As a result, there has to be oversight to make sure that services covered by the health plan aren’t being utilized where there’s really no science (medical evidence) behind it that this is going to have a positive effect on the member’s health.
What do employers need to know about precertification?
The main thing about medical necessity is that groups have created lists of services to be precertified. That means the provider has to say, ‘I want to do this, on this date. This is why, and these are the conditions that go into it.’ That system started in the 1970s, and a lot of self-insured plans have maintained lists of procedures to precertify, with little upgrade. This creates an administrative burden, so it’s important not to require it when it is not going to be advantageous to the outcome.
Medical management companies need to look at the return on investment for precertification and, if a procedure is going to be approved every time, there’s not a reason for the call. It places an extra burden on the provider, and creates worry for the member and extra paperwork for the claim paid.
On the other hand, there are procedures that don’t have medical evidence behind them. For a medical management company to review a procedure without medical evidence is just someone’s opinion that it is or is not medically necessary. So it is important when selecting a medical management firm to know what science (medical evidence) it is using to develop and maintain its lists and review of medical necessity.
What would you say to executives who say they don’t have time to deal with this?
They need to rely on someone who does know about it, whether that is a consultant or a credible carrier that incorporates these services. The savings can be from little — just a sentinel effect — to a significant savings because you are reviewing things that may not be medically necessary and only helping those members who really need help through case management. The employer should see a return not only on savings from discouraging medically unnecessary procedures but by helping members be more productive by managing their health conditions.
The employer can approach a decision on medical management either as a way to save money on health insurance, or as wanting to help employees and make resources available to them. When selecting a medical management company, you need to recognize, do you just want to save money, do you want to help the members, or are you looking for a combination of both?
Nancy J. Sublette, R.N., M.H.A., is business change manager, Sr., at HealthLink®. Reach her at (314) 925-6611 or email@example.com.
Federally mandated reforms have only made the system more confusing. Now, more than ever, you need someone on your side to help you make sense of the mess.
“If your health care consultant doesn’t understand how the system works, then you’re forced to become an expert in health care when you should be focusing on your core business,” says Frank L. Marrone, senior vice president and partner with Millennium Corporate Solutions. “There are qualified insurance advisers out there; investigate, interview and then engage with one that fits your needs.”
Smart Business spoke with Marrone about how a skilled consultant can help you navigate the confusing aspects of the health care system during health care reform and any other time you need a trusted adviser.
How is the health care and insurance system changing?
In our country, health care is a trillion-dollar industry that is driven by Wall Street. Wall Street and medicine are opposite forces. I’m not saying that one is good and one is evil; they just work in different directions. Wall Street exists for profitability. Executives of insurance companies keep their jobs by being profitable.
The health care system is a triangle consisting of the patient, the doctor and the insurance company. When the two most significant players are pulling in opposite directions with the patient in the middle, you have a broken system.
Employers, employees, family members — all patients — need to be able to make sound decisions with what we know to be true. Costs are not coming down, services are being stretched and the realities of health reform are only going to mean increased costs for the currently insured, while offering greater and more timely access to the uninsured or underinsured.
There is good and bad in almost everything. The good in health reform is going to cost a lot more than anyone knows.
Why are costs out of control and how can they be fixed?
The key element to health care reform and pricing is that the delivery system has not figured out a way to compensate doctors for keeping us healthy. Today, there is no incentive for a physician to have healthy patients because the physician will most likely go out of business.
Another reason costs are out of control is litigation. Everyone pays for medical malpractice claims; doctor premiums are passed on to all consumers. In fact, as medical products get priced, it’s necessary to factor in the cost of medical malpractice.
What can consumers do to survive in today’s health care system?
For example, A PPO rate for a family may be $2,300 per month, or $27,600 per year, just to have medical insurance — to prevent the risk of huge personal costs if they get sick. Who can afford that? And, how long can it be afforded?
The one thing consumers can do is ask themselves these questions: Do you exercise regularly? Do you consciously plan a healthy lifestyle? Do you eat proper food? We, as a nation, need to get healthy. If you are an overweight smoker with high cholesterol and hypertension and you want to eat a burrito at midnight, you are more likely to increase your chances of a heart attack.
First Lady Michelle Obama is promoting wellness and fighting child obesity on television, but I’m not sure people understand that getting healthy is a long-term process. Everyone wants to see immediate results, but patience is necessary. Just like no one gains 10 pounds in a week, no one loses 10 pounds in a week.
How can a health insurance broker or consultant help companies navigate the system?
You need someone on your side who understands how the system works. You cannot negotiate simply by telling an insurance company, ‘Give me a better price.’ You have to bring facts to support your claims.
The role of a good broker or consultant is to gather information from insurance companies and use that information to battle for his or her clients. At end of the day, insurance carriers will work cooperatively with good data and research — they want to make the best decisions too, so a good consultant will help develop that story.
For instance, if I let insurance companies know my client has had a good year, I will show them the utilization statistics to support my claim. If the carrier wants to charge my client a higher premium to compensate for other companies that have had a bad year, I will tell the carrier to get that increase from someone else — not from my client.
Frank L. Marrone is a senior vice president and partner with Millennium Corporate Solutions. Reach him at (818) 844-4120 or firstname.lastname@example.org.
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 email@example.com.
Today, more than ever before, employers are seeking an effective means of controlling growing health care expenses. Wellness programs allow employers to provide hands-on programs that benefit the overall health of their employees. These programs improve the lives of participants because they eliminate high-health-risk lifestyles.
According to many studies, more than 70 percent of all health care spending in the U.S. goes toward the treatment of chronic and preventable diseases. By offering employees the opportunity to assess and improve their health, employers can reduce their employees’ health problems and the skyrocketing costs of treating preventable conditions.
Corporate wellness programs are not new, but the model has drastically changed. Once viewed as an employee perk, wellness was considered offering free clinic screenings or giving away prizes to employees who had their blood pressure checked during their lunch hour. Employee participation was minimal as was the impact on the employer’s rising health care costs.
These types of programs — which simply offered already health-conscious employees a chance to further manage their health — are out. Today, a fully integrated wellness structure where employees are encouraged to take accountability is in. Old wellness programs were preaching to the choir, in that already healthy employees were the only ones participating. Today, employers are now realizing that positive health habits can be garnered through creative programs that engage all employees.
A benefit of implementing an incentive-based wellness program is its ability to transform the idea of health maintenance into something meaningful. Dr. Dee Edington, director of the Health Management Research Center at the University of Michigan, found that the average amount of health care spending for low-health-risk workers aged 35 to 44 in 2001 was $1,523. Workers who did not have their health screened and assessed via a wellness program spent — on average — $2,100, while employees who were labeled “high risk” spent approximately $4,530.
Employees also recognize the benefits of today’s wellness programs. Rather than finding resistance to these programs, many companies have seen enthusiastic buy-in; some companies have even seen employees ask for spousal participation. Because wellness programs are now viewed in a more positive light than ever before, companies nationwide are making the decision to integrate such programs within their employee benefits packages.
Companies we work with, both in Michigan and nationally, see an 85 to 95 percent participation rate. On average, when our clients implement wellness initiatives, about 75 percent of them are experiencing flat or negative trending in their health care costs, while the remaining 25 percent have seen cost increases of less than 10 percent. Those that saw increases typically had more employees with more than two health risks, and they expect their costs will continue to improve as their employees work to become healthier.
Companies interested in developing and implementing a wellness program are advised to discuss the option with a benefits specialist to gauge and understand how to fully incorporate wellness into their overall benefit design.
Because wellness programs can be as diverse as employees, there isn’t just one way to implement them. Success is dependent upon changing corporate culture to support and encourage employees to be healthy; companies that develop policies and procedures that support a healthier staff can assist employees with taking wellness into their own hands. Overall, creating an environment that highlights the benefits of adhering to a healthier lifestyle will, in turn, help your company achieve results. <<
David Zick is the president of Michigan-based Group Associates Inc., a nationwide leader in proprietary benefit management solutions, offering companies resources to meet their benefit administration and brokerage needs. For information, please visit www.groupassociates.com or call (248) 593-2000.