As a result of the Patient Protection and Affordable Care Act (PPACA) and its effects, employers are taking steps to manage the cost of care by moving toward self-funded insurance and greater oversight of health benefit plan subcontractors. Others are making a cost trade-off between the tax burden of providing versus not providing coverage.

Selvadas Govind, a senior manager in Assurance Services at Weaver, says it’s too soon to say whether costs will go up or down in our complex health care system.

“The only thing one can do is try to manage the risks that are presented at a particular point in time,” he says. “You’re not going to be able to influence the market or analyze it in any significant way.”

Smart Business spoke with Govind about some of the risks employers face in this new era of health plan benefits.

What is the impact of companies increasingly self-insuring? 

Larger businesses are making the shift toward self-insurance, which is more transparent in terms of management. Insurers no longer go to a company and give them a rate; rather, companies can pay medical costs themselves and hire a third-party administrator (TPA) to handle administration. It’s a great business practice, but the downside is employers are on a less-than-level playing field with insurance companies that know how the industry works.

It’s a big risk that needs to be managed, and many organizations are not in a position to mitigate those risks. In fact, one study found employer audits of TPAs had error rates for medical claims of 3 percent to 16.8 percent. Similarly for pharmacy benefit programs, errors ranged between 3 percent and 8 percent. A 3 percent error rate by a plan’s pharmacy benefit manager in a medium-sized entity of 2,000 employees can amount to an overpayment of $155,000. For this reason, it is often worthwhile to bring in external auditors with specialized knowledge to mitigate this risk exposure.

Employers also need greater oversight of health benefit plan subcontractors. For example, after an employee pays his or her pharmacy co-pay, the balance is charged to a pharmacy benefit manager (PBM) which, in turn, pays off the distributor or manufacturer and submits the claim to the self-insured company. However, there is usually a rebate from the distributor or manufacturer to the PBM. By right, that rebate — which can be quite substantial — belongs to the employer, not the PBM.

How does the individual mandate create new risks for employers?

With the individual mandate and the increased dependent eligibility age of 26, there’s a financial incentive for children to remain on their parents’ health care plans. The risk companies should consider is that some may try to retain children on their plans beyond age 26 and/or include dependents who are not necessarily their own. The benefit of this abuse to perpetrators is that they can choose to pay the lower tax penalty for not having individual coverage and still obtain coverage through their parents at employer-subsidized rates. So, the situation leads to an educated decision on whether it is more cost effective to try to stay on the parents’ plan, pay the penalty for not buying coverage, or buy coverage through an employer or a health benefit exchange.

You can audit this risk, but health benefit plan audits tend to be invasive, which could irritate employees. A way to sensitively handle it is to educate employees on the potential issue and what the cost could be if even a small percentage of employees are dishonest. Companies should also review the amount of evidence required to justify a dependent; however, if the requirements are too stringent, employees could resist.

Are many employers deciding to take the penalties and not offer insurance? 

It depends on the attitude of the employer and the type of work force. There will always be employers who offer better benefits than others. However, it’s a very industry-specific question, and in an industry with narrow margins, businesses may simply not be able to offer insurance. There could also be a shift away from full-time employees who qualify for health care benefits to the use of more part-time employees who would not qualify for employee-sponsored health benefits.

Selvadas Govind, MPA, CPA, CIA, CICA, CRMA, senior manager, Assurance Services, Weaver. Reach him at (512) 609-1940 or Selvadas.Govind@WeaverLLP.com.

Insights Accounting is brought to you by Weaver

Published in Dallas

As each element of the Patient Protection and Affordable Care Act unfolds, those who provide health care for American communities continue to pursue the legislation’s Triple Aim goals of better care, better health and better management of costs.

Smart Business spoke with MemorialCare Health System President & CEO Barry Arbuckle, Ph.D., to discover  more about this.

How are you preparing for health care reform?

MemorialCare is committed to bold goals in clinical and service excellence, steadfast fiscal discipline and in staying ahead of the curve. We are now implementing new approaches that we do anticipate will improve and ensure the satisfaction of our patients, our continued partnerships with physicians and engagement with employees while growing our capacity to greatly improve health care for our communities. We’re expanding ambulatory care, adding more hospitals and broadening outpatient offerings with the goal of delivering the very best value across all of our 250 facilities.

Well before reform began, we implemented substantial changes, moving from a system of caring for the sick to one focused on improving each individual’s health and wellness. Then, beginning some two decades ago, top physicians began an ambitious

effort to come up with a more scientific approach to the improvement of medical outcomes. Those efforts — today involving thousands of physicians, nurses and other clinicians who are studying the best medical care around the globe — have led to

MemorialCare surpassing the national standards regarding both evidence-based, best-practice medicine and medical outcomes.

What options are there for physicians?

MemorialCare has a very proud history of physician leadership and engagement. Partnership opportunities with our 3,000 affiliated physicians range from the joint ventures, leadership, management positions and participation in the MemorialCare Physician Society, to joining our employment and Independent Practice Association (IPA) models, and collaborations that involve innovative medical technology. We will continue to forge unique partnerships that will favorably impact an integrated approach to the delivery of health care while also ensuring a sound future for our physicians. Earlier in 2012, MemorialCare Medical Foundation announced that it would be affiliated with Greater Newport Physicians and would acquire the Nautilus Healthcare Management Group. By offering a range of partnership opportunities and forging strengthened alignments with physicians, we’re positioned to provide the best possible care, offering patients a choice from among the Southland’s best physicians, and carefully managing health care costs to both employers and consumers. Critical to this broad-ranging physician partnership approach is our commitment to maintaining strong relationships with independent physicians, medical groups and IPAs, and offering physicians myriad opportunities through the MemorialCare Physician Society.

How does technology improve medical care?

Groundbreaking medical technology has proved to yield faster, improved diagnoses; superior, less invasive and more targeted treatments; reduced hospital stays; quicker recoveries; and enhanced quality of life for our patients. The 320-Slice CT Scanner — the most powerful X-ray imaging device — provides high-quality imaging for early and accurate diagnosis and treatment of the heart, brain and tiny blood vessels. Robotic surgery enables physicians to operate with amazing precision through very tiny incisions for heart, gynecology, urology, gastroenterology and cancer procedures. MemorialCare, with one of the West’s busiest robotic surgery programs, boasts the county’s first national robotic surgical training center and is among only a few hospitals that have introduced robotic technology into a hybrid cardiovascular suite.

MemorialCare Cancer Institutes have the latest cancer diagnosis and treatment modalities for adults and children with the most sophisticated treatment technologies that are available today. The MemorialCare Heart and Vascular Institutes are offering

comprehensive centers for diagnosis, treatment and rehabilitation of cardiovascular disease with advanced, world-class care.

Digital technologies that take the form of Electronic Medical Records (EMRs) are allowing clinicians to have immediate

access to a patient’s health and medical history, maximize the clinical quality and patient outcomes at points of decision-making, reduce medical errors and vastly improve patient care. MemorialCare was the very first health care system in Orange County to initiate comprehensive EMRs for its hospitals that can now be found in physician offices and ambulatory sites. Many patients are accessing their health records to track and improve their own health and wellness.

Are health and wellness efforts working?

Our Good Life program works to improve the health and wellness of our employees and their families through our fitness challenges, our nutritional offerings and support for chronic conditions. Employers can take advantage of our expertise to improve the health of their staff with on-site screenings, physicals and more. MemorialCare can help employers adapt to health reform, trim health benefits and health costs and improve productivity. Further, as the only health system in Orange and Los Angeles counties with adult and children’s hospitals, we offer lifetime care and help consumers take control of their health and their lives.

Barry Arbuckle, Ph.D., is the president and CEO of MemorialCare Health System. The Southern California not-for-profit integrated  health care delivery system includes Long Beach Memorial, Community Hospital Long Beach, Miller Children’s Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley, Saddleback Memorial Medical Center in Laguna Hills and San Clemente; MemorialCare Medical Group; Greater Newport Physicians, an Independent Practice Association (IPA); MemorialCare HealthExpress retail clinics; and numerous outpatient health centers throughout the Southland. For information, go to memorialcare.com.

Insights Health Care is brought to you by MemorialCare Health System

Published in Los Angeles

Long before the Supreme Court upheld health care reform, health care organizations had begun implementation of substantial changes, moving from a system of caring for the sick to one focused on improving each individual’s health and wellness. Today’s consumers are increasingly taking control of their health and collaborating as true members of health care teams — for the betterment of themselves and of their communities.

To learn more, Smart Business turned to Barry Arbuckle, Ph.D., president and CEO of MemorialCare Health System and past chair of the California Hospital Association.

How is reform impacting health care?

One area that health care reform is addressing is the ‘Triple Aim’ of improving quality of care, reducing health care costs and also enhancing the patient experience. MemorialCare has been in the forefront of innovative and cost-effective health care delivery since opening its first hospital in 1905. It aims to continually improve patient quality, safety, satisfaction and outcomes, and engage consumers of all ages in improving their health, wellness and lifestyle.

The system realized decades ago the importance of establishing a more scientific approach to improving health care outcomes. That is when it became a national pioneer in best-practice, evidence-based medicine. The systems’ physician-led interdisciplinary teams identify, create, refine and expand upon the best diagnostic, treatment and prevention for virtually every disease, illness and medical category that a patient may face. Implementing optimal clinical standards across the entire health care system allows MemorialCare hospitals to achieve patient outcomes that surpass national and regional standards.

What is the role of electronic medical records (EMRs)?

To support evidence-based medicine, MemorialCare adopted electronic medical records systemwide. Many years ago, it was the first in Orange County to have a hospital go completely live with EMRs and all of its major facilities have comprehensive digital systems. The results are higher quality and safer care with clinicians able to immediately access patient records. Electronic records in physician offices and other locations add to benefits of more coordinated, seamless care throughout the MemorialCare Health System. And consumers who have begun adopting their own personal health records through the system’s patient portals translates into more people who are actively participating in their health care.

How are patients and families involved?

Patients and families are engaged in a variety of different ways. Education, screenings and health prevention programs are offered at hospitals, physician practices and outpatient centers as well as in the community, at the worksite and schools and online at memorialcare.org. Patient and Family Advisory Councils offer important advice on new and existing programs and services, helping to redesign key interactions by offering the ‘voice of the customer.’ And staff-led Partnership Councils collaborate on performance improvement and on patient experience projects.

An example of these efforts is the Executive Rounding. Each week, members of the system’s leadership team ask patients throughout the facilities about their care, allowing us to learn first-hand how we are doing and how staff can impact the hospital experience. Following these interactions, teams members immediately huddle with staff in that area — celebrating the positives, sharing feedback and opportunities to improve, discussing ideas and next steps.

Another example is the Hourly Patient-Family Rounds that supplement patient care provided 24/7. Each hour, someone checks in on patients, ensuring they are comfortable and that their needs are being met, thus building trusting relationships. The result has been better responses and communications among patients and their caregivers, with less anxious patients and improved patient and family satisfaction.

What about population health management?

For years, MemorialCare has participated in programs to coordinate and improve care of children and adults in the community with cancer, heart disease, orthopedic issues, asthma, diabetes, weight issues and scores of other diseases and chronic conditions in order to help consumers take control of both their health and their lives.

The Good Life program focuses on highly improving the health and wellness of employees and their families through fitness programs, nutritious offerings in the cafeterias and support for those with conditions such as high blood pressure and diabetes. This program is also extended to local employers who tap the system’s expertise to improve the health of their own work forces with onsite screenings and seminars, executive and employee physicals and more. MemorialCare also hosts programs to help employers adapt to health care reform, assist in trimming health benefits and health care costs and in improving productivity.

These combinations of activities in best-practice, evidence-based medicine and in advanced technologies, improving the patient experience, managing the health of the population and providing true value in health care have proven critical to all the communities the health system serves. These efforts will continue to result in extraordinary quality, proven treatments and comprehensive care that continually raise medical standards and meet the important goals of health care reform and beyond.

Barry Arbuckle, Ph.D., is the president and CEO of MemorialCare Health System. The Southern California not-for-profit health care delivery system includes Long Beach Memorial Medical Center, Community Hospital Long Beach, Miller Children’s Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center in Laguna Hills and San Clemente. For additional information on excellence in health care, please visit memorialcare.org.

Insights Health Care is brought to you by MemorialCare Health System

Published in Los Angeles
Tuesday, 03 July 2012 09:57

The CEO decision; Benefits or Fines

As the media is promoting employers will pay fines rather than continue to pay for employee benefits, I am trying to understand why they are trying to mess with the heads of business owners. We pose the argument, “Why would CEOs or executive directors pay taxes for a benefit they already offer their employees by free will now?”

Today, in 2012, we are not legally required to offer benefits to the employees, but do because we want to recruit and maintain the best talent we are able to. So why would that change? Why would employers now pay fines? I don’t know of one that would fall for that reasoning.

Of course the government would love to gain these tax dollars, but business owners are savvier than that. As a general rule we don’t like to pay more in taxes than we have to. We would rather invest in business operations, equipment, computers and/or our employees.

CEOs also care about their employees and gain employee loyalty through employee benefits, despite what the media says or thinks. Many employees would not take a job without them, unless it is a job of their choice and today some may feel they do not need benefits. These are the ones who will potentially feel the impact from this law unless they qualify for Medicare or other state insurance such as the California-offered Medi-cal.

Larger employers choosing not to offer benefits today may decide to pay taxes. However, just because they have not yet paid for benefits for their employees, why would they want to pay more taxes? The logic does not make sense. Take, for example, Medical CA HMO only: $320 (typical employer co-share cost more or less) x 100 employees = $32,000/month x 12 = $384,000, or an annual fine of $2,000 x 100 employees = $200,000.

Fines are potentially $120,000 less than paying for medical insurance for employees, under employee benefit group programs. However, what does one get in return for this? The answer is frustrated employees now mandated in 2014 to get their own individual insurance through an exchange, a broker or carrier. They may be likely to do this during office hours or leave for a company that offers insurance. Why?

  1. A group policy will always be richer, priced better and offer more assistance with claims through a company’s broker, and any pre-taxed dollars can be paid out through payroll.
  2. An individual plan has higher deductibles, co-pays and co-insurance and can cost a substantially higher amount for an individual than the group employee premium and will have to pay the bill every month with after tax dollars, on time or face cancelation.

In weighing the costs, most employers would prefer opting for employee retention, presenteeism, less turnover cost, and best offerings for recruiting. So the landmark Supreme Court ruling on June 28 upholding the individual mandate had wide-ranging implications. The legislation requires Americans to buy health insurance or pay a penalty, a key part of the law that had come under heavy scrutiny.

In a semi-conservative and also slightly technical statement, the court ruled that the mandate ius actually unconstitutional under the Constitution’s commerce clause, but it can stay as part of Congress’s power under a taxing clause. The court said that the government will be allowed to tax people for not having health insurance. Originally the wording “taxing” was avoided to make the bill a little more palatable to legislators to pass, potentially making it fall under the “commerce clause,” or ability for the federal government to regulate interstate purchasing.

Addressing the concern that this expands the commerce clause so far that people could, in the future, be forced to “buy broccoli,” as one argument puts it, Chief Justice John Roberts wrote, “(t)he Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” in the ruling.

The court’s ruling upholding the main part of Obama’s law means that people must buy health insurance or pay a tax up to several thousand dollars a year. It also means that other popular provisions of the law will stay, including the various employer mandates we discuss in our Smart Business webinar. We also had several carrier executives express their plans going forward to control cost through Accountable Care Organizations.

Now, as we continue to wait on the outcome of another decision pertaining to discrimination in employee benefit plans, employers are continuing business as usual. One employer states, “I hate the word discrimination when it comes to my decision to pay more toward my key executives or long term employees.” There is still a timeline on this matter expected from the Department of Labor forthcoming.

As time marches forward toward 2014, your benefits brokers will be more important than ever to help your team interpret your responsibilities. If it is not educated in HCR, then it may be time to find one who is.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at (818) 676-0044 ordanone@montageinsurance.com.

Insights Business Insurance is brought to you to Montage Insurance Services

Published in Los Angeles

The only sure thing with health care reform is that things are changing. No one is sure how, exactly, those changes will play out as current reform legislation is reviewed in the Supreme Court, or what will happen following the presidential election.

That uncertainty makes planning for the significant and steadily escalating cost of health care a real challenge for businesses. As costs increase, how can employers continue to provide benefits that attract and retain quality workers while managing their expenses?

“One of the things that employers should be doing now is reviewing their health care costs to begin to identify ways to control their costs, regardless of what happens with health care reform,” says Ron Present, principal, health care advisory services, Brown Smith Wallace, St. Louis, Mo.

Smart Business spoke with Present about what employers should know about the current state of health care reform and how they can begin to prepare for the future.

What are employers’ greatest concerns surrounding health care reform?

The biggest fear is that their health care costs will increase significantly, and that is a valid fear. Then there is the question of how to manage expenses while continuing to offer quality benefits to employees. In today’s market, companies must begin to view health care as more than just an employee benefit — it’s a recruiting and retention tool that provides companies with a competitive advantage.

Employers must look at benefits from a strategic perspective and consider how they can position their health insurance offering as an incentive. At the same time, they must manage the bottom line, and that won’t be easy. In addition, there is widespread confusion about health care benefits in light of the uncertainty in health care reform. In the end, it is the responsibility of — and perhaps opportunity for — employers to clearly communicate to their employees about the company’s benefits.

How could the individual mandate affect employers?

The individual mandate is a law requiring that all individuals purchase health care insurance or pay a penalty that will phase in during 2014. The individual mandate, as part of the health care reform legislation, is currently being reviewed by the Supreme Court, and it’s a sticky issue.

Is it constitutional to mandate that all citizens have health insurance? Is it fair to charge a penalty to employers for not offering health care benefits? And because the mandate has been written into the tax code — and the Supreme Court cannot rule on tax code issues unless there has been harm done — will the court be able to rule on the individual mandate before it is set to go into effect in 2014? A key related question is how the upcoming presidential election will impact the legislation.

The health care reform plan could be tossed aside completely, altered or kept fully intact.

What decisions will employers be forced to make regarding health care legislation?

Concerning the individual mandate, employers must determine whether it’s more financially prudent and culturally sensible to offer benefits to employees or to pay the penalty for not doing so. A discussion with an experienced tax professional who is well-versed in health care reform legislation can help employers consider the financial impact of this decision and determine the right course of action.

Meanwhile, companies will need to heighten their monitoring of hourly employees because those who work 130 or more hours per month will be automatically eligible for company health care benefits if the current legislation stands. If employers do not abide by this and exclude those employees, they will pay a steep penalty. This becomes particularly complicated with part-time and shift workers and in situations in which workers are picking up additional shifts, which may push them over 130 hours in a given month. Employers will need to carefully monitor employees time on a real-time basis and manage employees in terms of their monthly/hourly workloads. Currently most systems track data on a pay period basis (weekly, bi-weekly, semi-monthly). Companies will need to ensure they have systems in place to be able to track hours on a monthly basis.

What should business owners be emphasizing in their communications with employees?

According to an ADP HR/Benefits Pulse Survey on Employee Benefit Tools, 40 percent of employees do not understand their current benefits plan. It is critical to drive home to employees the value of the health care benefits that you offer. Communicate often, and reach out to employees in face-to-face meetings, through e-newsletters, mailers that go home to spouses and dependents, and via the company intranet.

Emphasize the importance of wellness and enforce employee accountability, communicating that the healthier they are, the less they  could pay for their monthly health insurance premium. Be proactive by implementing wellness programs including incentives for better nutrition or exercise.

What should employers be doing right now in light of the current uncertainty?

Now is the time to get discerning input on the strategic and cost differentials of offering health insurance versus paying a penalty for not doing so. You should explore ways to reduce cost, without sacrificing benefit and identify systems to put in place that will improve real-time reporting.

The keys to success will be having sound knowledge of the current situation and a strong framework in place before you need to make the upcoming changes and decisions you face as health care reform is implemented. With these two essential procedures under your belt, you will be in a position to make wise strategic decisions for the ongoing health of your business.

Ron Present, CALA, CNHA, LNHA, is principal, health care advisory services, at Brown Smith Wallace, St. Louis, Mo. Reach him at (314) 983-1358 or rpresent@bswllc.com.

Insights Accounting is brought to you by Brown Smith Wallace LLC

Published in St. Louis

A Supreme Court ruling on the constitutionality of the Patient Protection and Affordable Care Act is expected at the end of June, which could unravel the reform that employers have been dealing with since the first wave of provisions rolled out in 2011.

“These provisions generally caused employers to pay more for their benefit plans,” says Sandy Ageloff, Health and Group Benefits leader, Southwest, for Towers Watson. “This impacted a number of large employers in the self-funded category, with a cost increase somewhere in the range of 0.5 percent to 2 percent.”

While you might be tempted to take a wait-and-see approach instead of preparing for additional provisions set to roll out in 2014 and 2018, that could be dangerous.

“It’s better to have a portfolio of scenario planning rather than having the act upheld and be saying, ‘We were waiting to see what would happen before we did anything,’” says Ageloff.

Smart Business spoke with Ageloff about how employers need to shift their strategic focus around the role health benefits play today and determine what role they should play in the future.

How could the upcoming Supreme Court decision on health care reform impact employers?

Regardless of the outcome, this will generate strong political reactions from both sides of the aisle. If upheld, we expect to see Republicans in Congress attempt to repeal certain provisions of the legislation and to defund specific elements, especially the state insurance exchanges set to begin in 2014.

If the legislation is ruled unconstitutional, we expect the Supreme Court will make a high-level statement and push it back to Congress and the Oval Office to sort out. The challenge is that a number of things that have been implemented would be politically difficult to undo for both parties, such as the 100 percent preventive care clause, the removal of lifetime maximums on coverage and the expansion of dependent coverage. Even if the government is silent on those provisions, the question becomes, ‘Would employers and insurance carriers actually undo them?’

With a ruling due so soon, why shouldn’t employers wait to see what happens?

Employers should act now because of the very broad business implications that health care reform could have. Employers should be treating it as business contingency planning and need to understand their options.

Also, there are multiple touch points, such as underlying health care costs, attraction and retention, and work force composition. Employers that have large seasonal, part-time and variable work forces might face issues in 2014 when they have to offer coverage to anyone working 30 or more hours per week. These employers have a very fundamental business decision to make about how to structure their work force and they might want to redefine how they manage workers. By the time the Supreme Court decision comes out, there won’t be much time for large employers to have their strategy in place by January 2014.

What else do employers need to keep in mind regarding health care reform?

The next milestone is 2014, when state insurance exchanges are set to go live, the individual mandate for all U.S. citizens to enroll in some form of health care coverage or pay a penalty will be enforced, and employers who offer coverage and don’t meet certain eligibility and employee contribution affordability requirements will face government penalties.

It’s important for employers to understand who in their workforce meets those eligibility requirements. If they don’t, it will trigger a penalty on the employer’s entire work force population. For large organizations (e.g., a company with 5,000 eligible employees), penalties could reach $10 million, depending on the scenario.

What consequences could result if employers pass on health care increases to employees or reduce benefits?

In the U.S., benefits are a top-five attractor for employees looking externally for a position, and it influences retention and engagement. Employees have become more sophisticated at evaluating not only their take-home pay but also the benefits that employers offer.

Top talent is difficult to attract and retain. The challenges for employers are making sure they are in the right competitive phase and are not overbenefitting people, as well. Finding the balance between what employees want and what employers can afford is important.

How can employers cope with current changes to the health care laws?

Cost control is one way to create a sustainable benefits plan. Another is to focus on employee health. There’s a need to decrease the rate of increasing costs. While the Consumer Price Index remains in the low single digits, health care costs are trending as a three- to four-time multiplier on the general CPI number. As a result, employers with business growing at a much slower rate face health care costs that are growing exponentially. By focusing on the health of employees, employers can change the rate of increases over time.

What are challenges of focusing on the health of employees?

The two biggest challenges are capturing employees’ attention and making them comfortable with the fact that the employer has a sincere interest in their well being. There’s a growing sense of skepticism about why employers care about employees’ health, so making sure they understand what’s in it for them is important. Make sure they understand it’s a win-win — employers have healthier employees who are at work more often and who are more vital and engaged, and employees gain a better quality of life. They have the chance to become fitter and healthier, spend less of their own money on health care and live longer to enjoy the fruits of retirement.

Sandy Ageloff is Health and Group Benefits leader, Southwest, at Towers Watson. Reach her at (310) 551-5709 or sandy.ageloff@towerswatson.com.

Insights Human Capital Solutions is brought to you by Towers Watson

Published in Los Angeles

There has never been a more important time to take a long, hard look at your employee benefits package and how it should be structured moving forward. With Obamacare breathing down our necks and new regulations and taxes at every turn, now is the time to sit down with a trusted broker and formulate a strategy that best meets the needs of your company, says Kenan Knight, account manager at Ashton Staffing Inc.

“Gone are the days of cookie cutter options and spreadsheet quotes for your renewal meetings,” says Knight. “If you are not planning on how to deal with the Patient Protection and Affordable Care Act (PPACA) and the changing landscape of employee benefits, then you are planning to fail.

Smart Business spoke with Knight about how to prepare for the upcoming changes and the options available to businesses when it comes to health insurance programs.

What options do employers have when it comes to shaping their benefits offerings?

There are still many options available for business owners when it comes to shaping their benefit offerings. These depend on how many employees you have, how your company is structured and how large a role your health insurance package plays in hiring and retaining great personnel in your industry. As of now, employers can still decide on what coverages they wish to offer, how much they wish to contribute to the cost, whether a wellness plan is feasible and/or beneficial and if you would like to self-insure or be fully insure.

As we move toward 2014 and the full implementation of PPACA, we will see fewer and fewer options available as there are more government mandates and fewer players in the health insurance market.

What should a company look at to make these decisions?

Company structure is one place where business owners should look in dealing with the rising cost and compliance of health insurance packages. Within your company structure, there are several questions you should ask when it comes to dealing with benefits packages.

Can you 1099 some or all of your employees so you don’t have to offer benefits at all? This is certainly an option, but don’t overlook how this will affect morale and your ability to hire and retain good employees. Would using a temp agency be beneficial so that the temp agency is providing the benefit package and not you company? Is your company set up so that you can offer a ‘management carve-out’ to have different levels of benefits for different levels within your company?

What do you consider a full-time employee and what does your insurance contract consider a full-time employee? Some carriers allow you go down to 30 hours a week and still consider an employee full time, which may allow you to move more people onto your plan. Or, you can set full time as 40 hours, which may allow you the flexibility to move some people off of your plan. Again, carefully consider how all of this will affect morale and also be aware of what your competitors are doing.

What kind of guidance can employers expect from a broker/consultant?

The level of service you receive from your broker is more important now than ever. If your broker is still just coming in with a spreadsheet of your current plan and similar plans with other carriers, it is time to start looking for a new broker. Gone are the days of simply jumping from carrier to carrier or just changing a deductible or co-pay. Regardless of whether the Supreme Court strikes down PPACA as unconstitutional, the health insurance landscape has and will continue to change.

States and insurance carriers have already taken so many steps to deal with the impending complications of PPACA that things will never go back to how they were. Your broker should already be talking to you about how PPACA will affect your company and what you can do to stay ahead of the curve. A once-a-year renewal meeting is no longer enough.

Your broker should have tools in place to help you facilitate insurance information to your employees; many online tools have been available for years and you should have one if you have 10 or more employees. The broker should also be talking to you about your company structure and how you might rearrange it to deal with the new landscape. Another tool your broker should be sharing with you is a benchmark report showing what companies similar to yours are doing for benefits.

Finally, your broker should be talking to you about wellness, especially if you have 50 or more employees. Wellness is an area in which you can hope to control at least some your own insurance cost by helping your employees get and stay healthy.

What common mistakes do employers make during this process, and how can they avoid them?

The main mistake employers make is starting the renewal process too late. Business owners and HR managers have a lot of moving parts to deal with on a daily basis and many times will only deal with things as they come up. When that happens with benefits, you are in a rush to simply find a comparable plan that doesn’t raise costs or lower benefits too drastically. This is a pitfall you can no longer afford.

As a rule of thumb, you should start the renewal process at least three months before your renewal date. Have a mid-year meeting with your broker and discuss your concerns and needs so that, together, you can start to formulate a plan of action. If your broker is stuck doing the same old thing, it is time to start interviewing new brokers. Every company and every situation is different, so having a trusted broker is key to answering your benefits questions.

Kenan Knight is an account manager at Ashton Staffing Inc. Reach him at (770) 419-1776 or kknight@ashtonstaffing.com.

Insights Staffing is brought to you by Ashton

Published in Atlanta

The Patient Protection and Affordable Care Act is well named, as its aim is to make health care providers accountable for delivering better care. As a result, the reforms make skilled health care risk management even more vital.

“The Patient Protection and Affordable Care Act has initiated a fundamental shift in the manner in which health care providers are going to be paid,” says Ron Calhoun, managing director and national health care practice leader with Aon Risk Solutions. “We are beginning a transition from volume-based methodologies to outcome-based methodologies. Prior to this, we have been on a fee-for-service model, as health care providers were compensated for volume.”

Smart Business spoke with Calhoun about how risk management integrates with health care in an age of reform.

What effect is health care reform having on the health care delivery system?

One of the consequences is that reform is creating the need for delivery systems to more fully integrate and provide a broader continuum of services. To take a bundled reimbursement, as opposed to the old pay-for-volume model, health care providers will be compensated based on outcomes. That creates a need for them to more fully integrate. On the front end, they will need to build out their ambulatory capabilities, and on the back end, they will need to improve post-acute capabilities.

How will the shift to outcome-based compensation affect providers?

The Centers for Medicare and Medicaid Services has implemented a compensation mechanism called the value-based purchasing program for providers to measure quality. There are 12 clinical process measures and nine patient experience measures. This program, which takes effect in fiscal year 2013, is about 70 percent weighed toward the 12 clinical processes and about 30 percent weighed toward the nine patient experience measures.

If health care providers have Medicare or Medicaid reimbursements in 2013, they can participate in this program. Then, those measures will have a real impact on their reimbursement thresholds. The measurements, plus the overall shift away from volume toward getting paid for outcomes, makes risk management programs even more critical than their historical place in patient safety.

How can a risk management program help with those measures?

Nationally, our health care delivery system does not have a standardized, systemic quality measuring process. When The Institute of Medicine issued its 1999 report, ‘To Err is Human,’ it started the patient safety movement.

Risk management has been proactive in patient safety since 1999, but we still have negative outcomes in our health care delivery service. After a six-year decline, we are starting to see an increase in the frequency of health care professional liability claims.

What factors affect the frequency and severity of health care liability claims?

From 2000 to 2006, there was a decrease in the frequency of health care professional liability claims, driven by three factors. One was the proliferation of tort reform. Second, there was an investment in patient safety systems at the provider level. Third, the provider community did a good job managing the perception of there being an availability-of-care crisis because of malpractice costs. Those have contributed to a downward pressure on health care professional liability claims.

From 2007 to the present day, there have been continued investments in patient safety initiatives, but we are seeing an increase in claims because of two factors. The first is tort reform erosion. In some states, tort reform bills have been either reformed or weakened. The second factor is economic stress.

There is an interesting correlation between the unemployment rate and an increase in health care professional liability and medical malpractice claims frequency. For every 1 percent increase in the unemployment rate, there is a corresponding 0.3 percent increase in health care professional liability and medical malpractice claims frequency, with a three-year lag. We are starting to see the post-2007 unemployment rate as a contributing factor to increasing claims frequency.

Unlike claims frequency, claim severity has increased at a steady rate, 4 percent over the past six years. That is cause for concern.

What can be done to improve outcomes and reduce medical claims?

One of the biggest barriers to improving risk management and patient safety is the ability to measure outcomes and the speed with which outcomes can be measured. One feature of the Patient Protection and Affordable Care Act is providing financial incentives to hospitals and physicians to further the meaningful use of electronic medical records (EMRs). The proliferation is dramatic, but it is still a fractured business.

There are three levels of sophistication in EMRs. The first level is simply making a paper file electronic. The second is computerized physician order entry, or CPOE. The third and most complex level is platforms with clinical decision support data. That third level will be necessary going forward to drive down the incidence of preventable medical errors.

More sophisticated EMRs will improve outcomes because physicians will have clinical decision support to help them adhere to clinical protocols at their fingertips. This is important because one of the biggest variables for integrated delivery systems to manage as they make the shift from volume-based to outcome-based methodologies is their ability to narrow physician practice pattern variation.

This technology comes with liabilities. If physicians have clinical decision support at their fingertips and depart from protocols, and an adverse event occurs, these errors could have a greater financial consequence than in the absence of such technology.

Ron Calhoun is managing director and national health care practice leader with Aon Risk Solutions. Reach him at (704) 343-4128 or ron.calhoun@aon.com.

Published in Detroit

The Patient Protection and Affordable Care Act is well named, as its aim is to make health care providers accountable for delivering better care. As a result, the reforms make skilled health care risk management even more vital.

“The Patient Protection and Affordable Care Act has initiated a fundamental shift in the manner in which health care providers are going to be paid,” says Ron Calhoun, managing director and national health care practice leader with Aon Risk Solutions. “We are beginning a transition from volume-based methodologies to outcome-based methodologies. Prior to this, we have been on a fee-for-service model, as health care providers were compensated for volume.”

Smart Business spoke with Calhoun about how risk management integrates with health care in an age of reform.

What effect is health care reform having on the health care delivery system?

One of the consequences is that reform is creating the need for delivery systems to more fully integrate and provide a broader continuum of services. To take a bundled reimbursement, as opposed to the old pay-for-volume model, health care providers will be compensated based on outcomes. That creates a need for them to more fully integrate. On the front end, they will need to build out their ambulatory capabilities, and on the back end, they will need to improve post-acute capabilities.

How will the shift to outcome-based compensation affect providers?

The Centers for Medicare and Medicaid Services has implemented a compensation mechanism called the value-based purchasing program for providers to measure quality. There are 12 clinical process measures and nine patient experience measures. This program, which takes effect in fiscal year 2013, is about 70 percent weighed toward the 12 clinical processes and about 30 percent weighed toward the nine patient experience measures.

If health care providers have Medicare or Medicaid reimbursements in 2013, they can participate in this program. Then, those measures will have a real impact on their reimbursement thresholds. The measurements, plus the overall shift away from volume toward getting paid for outcomes, makes risk management programs even more critical than their historical place in patient safety.

How can a risk management program help with those measures?

Nationally, our health care delivery system does not have a standardized, systemic quality measuring process. When The Institute of Medicine issued its 1999 report, ‘To Err is Human,’ it started the patient safety movement.

Risk management has been proactive in patient safety since 1999, but we still have negative outcomes in our health care delivery service. After a six-year decline, we are starting to see an increase in the frequency of health care professional liability claims.

What factors affect the frequency and severity of health care liability claims?

From 2000 to 2006, there was a decrease in the frequency of health care professional liability claims, driven by three factors. One was the proliferation of tort reform. Second, there was an investment in patient safety systems at the provider level. Third, the provider community did a good job managing the perception of there being an availability-of-care crisis because of malpractice costs. Those have contributed to a downward pressure on health care professional liability claims.

From 2007 to the present day, there have been continued investments in patient safety initiatives, but we are seeing an increase in claims because of two factors. The first is tort reform erosion. In some states, tort reform bills have been either reformed or weakened. The second factor is economic stress.

There is an interesting correlation between the unemployment rate and an increase in health care professional liability and medical malpractice claims frequency. For every 1 percent increase in the unemployment rate, there is a corresponding 0.3 percent increase in health care professional liability and medical malpractice claims frequency, with a three-year lag. We are starting to see the post-2007 unemployment rate as a contributing factor to increasing claims frequency.

Unlike claims frequency, claim severity has increased at a steady rate, 4 percent over the past six years. That is cause for concern.

What can be done to improve outcomes and reduce medical claims?

One of the biggest barriers to improving risk management and patient safety is the ability to measure outcomes and the speed with which outcomes can be measured. One feature of the Patient Protection and Affordable Care Act is providing financial incentives to hospitals and physicians to further the meaningful use of electronic medical records (EMRs). The proliferation is dramatic, but it is still a fractured business.

There are three levels of sophistication in EMRs. The first level is simply making a paper file electronic. The second is computerized physician order entry, or CPOE. The third and most complex level is platforms with clinical decision support data. That third level will be necessary going forward to drive down the incidence of preventable medical errors.

More sophisticated EMRs will improve outcomes because physicians will have clinical decision support to help them adhere to clinical protocols at their fingertips. This is important because one of the biggest variables for integrated delivery systems to manage as they make the shift from volume-based to outcome-based methodologies is their ability to narrow physician practice pattern variation.

This technology comes with liabilities. If physicians have clinical decision support at their fingertips and depart from protocols, and an adverse event occurs, these errors could have a greater financial consequence than in the absence of such technology.

Ron Calhoun is managing director and national health care practice leader with Aon Risk Solutions. Reach him at (704) 343-4128 or ron.calhoun@aon.com.

Published in St. Louis

The coming year is a quiet one for health care reform implementation, but 2012 is significant in terms of whether the Patient Protection and Affordable Care Act (H.R. 3590) we know as the Health Care Act will continue as is.

The question is whether the act is constitutional in whole or part, and with two opposing federal appellate court decisions, the case has landed on the doors of the U.S. Supreme Court, which will decide whether to accept the case this year.

What next? And if the case is heard by the court this year, how will the decision affect the future of health care reform? We won’t know until 2012.

“Although 2012 is a quiet year in terms of what new provisions and regulations are required,” says Christopher Huryn, a partner at Brouse McDowell who works out of the firm’s Akron office in its Health Care Practice Group. “It’s a watershed year in many respects.  2012 will likely set the stage for where we go and how far we go with the Health Care Act as it stands today.”

For now, it’s a wait-and-see game.

Smart Business spoke with Huryn about what businesses should know about health care reform.

What court decisions have already been made concerning the Health Care Act?

Two conflicting federal appellate court decisions were made this year.  Most recently, in August 2011, the United States Court of Appeals for the Eleventh Circuit (Alabama, Florida, Georgia) ruled that the individual mandate portion of the Health Care Act, which requires that all individuals have a defined level of health care coverage (or else be penalized), is unconstitutional. However, the court ruled that only this portion of the act was unconstitutional, and did not strike down the rest of the act.

Meanwhile, in June 2011, the Court of Appeals for the Sixth Circuit (Ohio, Michigan, Kentucky, Tennessee) issued a decision upholding the individual mandate, ruling that it is constitutional to require individuals to purchase health care. In response to these decisions, several trade groups, the U.S. Department of Justice, and 26 state attorneys general, including Ohio Attorney General Mike DeWine, filed petitions with the U.S. Supreme Court, asking the court to decide whether the Health Care Act is unconstitutional, in whole or part.

How soon could the U.S. Supreme Court make a decision about the constitutionality of the act?

In the coming months, the Supreme Court will decide whether to accept the appeal and hear the case during its current term, which began October 2011. With two conflicting rulings from the appellate courts, the procedural process to get this issue to the Supreme Court has been accomplished. However, although the process is complete, and both proponents and opponents are eager to get a decision on the Health Care Act, we must wait and see whether the Supreme Court agrees to accept the case.  If it does, the court will likely hear oral argument in early 2012 and issue a decision by June or July of 2012.

What are some possible outcomes if the Supreme Court accepts the appeal and hears the case during this term?

The Supreme Court could rule that the entire Health Care Act is constitutional. Then, implementation of provisions and requirements would continue on schedule. Or, the court could rule that part or parts of the act are unconstitutional, such as the individual mandate. In that instance, legislators could go back to the drawing board to rewrite the unconstitutional issue(s). Or, the entire act could be ruled unconstitutional, and then we’re back to square one, although some contractual arrangements will continue, such as  health insurance policies currently in effect that include provisions already implemented under the current Health Care Act.

For now, no one knows what will happen. We could be looking at very different health care reform legislation down the road if the current act is deemed unconstitutional. Or, we might continue on the very path we are going down today, implementing provisions over several years leading up to 2014.

What can business owners do in the meantime?

First, eligible business owners should be sure to take advantage of the Small Business Health Insurance Tax Credit. This credit is worth up to 35 percent of a small business’s premium costs in 2010 (25 percent for tax-exempt employers). On January 1, 2014, the rate increases to 50 percent (35 percent for tax-exempt employers). The credit phases out gradually for employers with average wages between $25,000 and $50,000, and for employers with the equivalent of 10 to 25 full-time workers. Talk to a professional about whether your business qualifies.

Second, before making any changes to your current health care coverage, keep in mind that certain ‘edits’ to your plan will not uphold the plan’s grandfathered status. A grandfathered plan is the one you had on or before March 23, 2010, when the Health Care Act was put into effect. You are allowed to keep that plan and, depending on the coverage, it could cost less than plans required by the individual mandate that goes into effect in 2014. So be sure to seriously consider any changes that could cause your plan to lose its Grandfathered status and could dramatically affect your bottom line in the future.

For now, the bottom line for businesses is to continue to work hard, be innovative and meet your customers’ needs — and wait to see what the Supreme Court decides in 2012.

Christopher M. Huryn is a partner with Brouse McDowell at the firm’s Akron office. Contact him at (330) 535-5711 or churyn@brouse.com.

Published in Akron/Canton