Selecting the proper health benefit plan can be crucial to any employer as it is both a major financial investment and contributes to a healthy and productive staff. While selecting the basic plan is the first step, employers cannot stop there. It is then important to ask what features or wellness programs can be added to create the most valuable plan possible at the best cost.
Programs such as HealthbyChoice Incentives can help employers save up to 13 percent on premiums depending on the plans they offer, says Don Whitford, director of sales and client services for Priority Health. Such programs are designed to encourage healthy lifestyles for employees.
In part two of the health plan series, Smart Business spoke with Whitford about the success of combining health and wellness plans and how they can save employers money.
What is HealthbyChoice Incentives?
It is a health plan combined with a wellness program that looks at employee behaviors. There are two different benefit designs in this plan: choice and standard. With this plan, qualifications are developed that an employee must meet. If the employee meets the qualifications, he or she is placed in the choice benefit design group and his or her deductibles and co-pays are lowered. If an employee doesn’t meet program requirements, he or she is placed in the standard design plan and has higher co-pays and deductibles.
How does an employee begin the process of HealthbyChoice?
Employees begin by completing a health risk assessment within 90 days of the commencement of the plan. Their physician must fill out a qualification form supplied by the health plan. This form requires the physician to evaluate and confirm that the employee is a non-tobacco user, has a body mass index under 30 and his or her blood pressure is under 140 over 90.
Employees who meet these qualifications are moved to the choice category and are rewarded with lower co-pays and deductibles. If the employee does not meet these qualifications, he or she is not limited to higher co-pays and deductibles. Rather the employee can complete a fasting cholesterol test, a fast blood sugar test and agree to follow a treatment plan designed by his or her physician and still be rewarded with lower co-pays and deductibles. Employees who do not meet qualifications and choose not to follow a physician’s plan will have a health plan with higher costs.
The HealthbyChoice plan is a participation-based wellness program, not an outcome-based program. Therefore, you will not be required to drop 40 pounds overnight, rather you are asked to follow the plan your physician has designed to help you live a healthier life.
How does the difference in co-pays and deductibles affect an employer?
An employer’s rate remains the same no matter the benefit design in which employees are placed. There is still a savings if all employees move into the choice design program. Employees in the choice program are leading healthier lifestyles, therefore requiring less medical care and reducing overall medical costs. It is important for employers to communicate to employees that participation is rewarding, both financially and in life.
Why would an employer want to introduce the HealthbyChoice Incentives plan?
The goal of this plan is to get employees to emulate healthier behaviors and live a healthier life. By doing so, the employer and the employee experience cost savings.
In addition to premium savings of up to 13 percent, HealthbyChoice Incentives is beneficial to the employer because the health plan will evaluate the data collected and provide a comprehensive study for the employer to review and utilize when deciding what plans and coverage to select in the future. The health plan will also help the employer implement programs to improve on areas of employees’ weaknesses detected in the study.
Are there other plans that can help reduce employer costs?
Other programs, such as co-payment alignment, set different prices for different services. For example, a co-pay for a visit to a general physician may be $10, a specialist $20 and the emergency room $100. The point of this program is not to discourage the use of medical facilities but rather encourage people to seek care in the most appropriate setting. It helps discourage people from using emergency rooms for everyday needs.
This concept can be applied by itself or with any other benefit design plan excluding the Health Savings Account. It can save up to 6 percent on premiums alone. It encourages members to see a general physician for a cold or cough to receive the same quality of care but at a fraction of the cost.
DON WHITFORD is director of sales and client services for Priority Health. Reach him at email@example.com or (248) 324-2711.
Any employer concerned about providing health care benefits for his or her employees has to first understand the parts of the benefit plans that matter most to the employees. In a majority of cases, the two factors employees care most about are the provider network and the cost of the plan.
For many employees, trying to weigh the importance of those two factors is not always easy. The complexity of health insurance can make it even more difficult. For instance, how much importance should an employee place on the network access he or she would have with a PPO plan?
“An employer needs to provide employees with an array of choices and education materials to inform employees about what they can and should expect from a health plan,” says Anthony Benevento, vice president of sales and marketing, UPMC Health Plan. “That is the best way to provide for their health care needs.”
Smart Business talked with Benevento about what employers can do to help employees select a health plan.
What should an employer look for in health care coverage?
First, the plan options need to be affordable for the participants. Employers should communicate with employees to understand what costs they feel they are able to absorb. Beyond that, you should look for things such as preventive care benefits, quality customer service and extensive online tools and services. You also need to research a health plan’s reputation. Is it one of quality? Is it reliable? Has it established a good track record? But, remember, to an employee, that can all be secondary to a bigger issue: Does the health plan’s network of providers allow them access to the hospitals and physicians they prefer? Figure out the employees’ needs, and then look for a plan that helps meet those needs.
It is also beneficial for an employer to look at the extras a health plan provides. For instance, are there wellness programs available for employees? Does the health plan place special emphasis on preventive services? Are there added benefits, such as discounts at gyms or fitness clubs? Such added benefits add value to the overall plan and often help improve the overall health of employees.
An employer should also be aware of an insurance company’s reputation in the region and how well established it is.
How can an employee determine how much a health benefits package will cost?
To determine the true cost of health insurance, the employee must look at the cost of the monthly premium as well as other costs, such as co-payment requirements for doctor visits and other services, out-of-network costs and co-payments or deductibles that would be part of the prescription drug coverage. There are also less visible costs of which one should be aware, such as coinsurance, which is the part of the cost that is owed by the insurer after the deductible is met. Also, is there an annual limit to the amount of money spent or to the number of hospital days permitted? An employee needs to look at all these things to determine true cost.
Why is it beneficial that employers provide quality health benefits for their employees?
Simply put, this is something that is considered extremely important to employees. A 2007 survey sponsored by the Center for State and Local Government Excellence showed that 84 percent of workers place an extremely high value on health care coverage. Medical insurance ranked higher than 14 other benefits and offerings in the survey. In general, health insurance has been shown to be good for increasing retention, improving recruitment and morale and lowering absenteeism.
Should an employer use a broker to help purchase health insurance?
There is no one correct answer for all employers. Each employer needs to make that decision based on factors such as the size of the company and the comfort level an employer feels with dealing with health insurance issues. If you do decide to work with a broker, look for flexibility, responsiveness, services that are unique to that broker and the ability to solve problems. You also want a broker to be able to provide a fair cost analysis of all of the options available to your organization.
What type of benefit information should an employer provide for employees?
A summary of benefits is essential because employees need to know about their coverage. Details about coverage limits, such as pre-existing conditions, should be shared along with coverage for preventive services, procedures and medications. Any information about drug coverage and cost sharing is important to employees, as is information on nontraditional coverage, such as consumer-directed plans.
ANTHONY BENEVENTO is the vice president of sales and marketing for UPMC Health Plan. Reach him at firstname.lastname@example.org or (412) 454-7826.
Prescription drug costs continue to be the fastest growing health expense in our country. Experts project increases as high as 13 percent during the next several years. Critics of rising drug costs are quick to blame the pharmaceutical companies’ advertising and aggressive sales practices when, in fact, there are many other factors that contribute to this increase. Primarily, the third-party payer systems have discouraged patients’ personal accountability for their health care decisions, says Sally Stephens, president of Spectrum Health Systems.
Other factors include increases in diagnosed chronic conditions, such as asthma, diabetes and heart disease. Innovative new treatments for osteoporosis and anemia, as well as more cost-effective applications of drug therapies, are also factors. These trends and rising costs have many companies re-thinking their generous health care benefits.
Smart Business spoke with Stephens about rising drug costs, the use of generic drugs and why generics shouldn’t be feared.
What options do business owners have to deter prescription drug costs?
A very significant trend gaining traction as a mechanism for managing these costs and encouraging individual accountability is defined-contribution or consumer-directed health plans. These plans place the decision about the right level of pharmaceutical spending where it belongs: in the hands of the consumer and physicians. Instead of paying on a prescription-by-prescription or visit-by-visit basis, the employer contributes a fixed sum that employees can spend at their discretion. Other tools utilized include pharmacy networks, in-house networks, mail-order programs and drug formularies. Prevention will always play a key role in managing costs. Early detection allows an individual to catch a problem prior to it getting out of control and becoming a crisis.
Do lower prescription drug costs mean lower rates of successful recovery?
With all the frenzy for cost cutting, employers should keep in mind the value that prescription drugs provide. Some prescriptions are used for preventive measures against serious and costly diseases and conditions. High blood pressure medication, when controlling blood pressure, can decrease medical costs from complications of high blood pressure, such as heart and kidney disease. In addition, employees who are compliant with their prescriptions return to the work force more quickly and are more productive.
Are generics good options for cutting costs?
One popular approach for managing prescription drug costs is by using formularies, or lists of specific medications that employers will pay for. Usually, formularies involve eliminating certain drugs entirely or substituting one drug for another. Two types of substitutions include: generic substitutions in which a generic drug is substituted for a brand-name drug and therapeutic substitutions where another of a similar type replaces a particular type of drug. Generics can still vary in cost by as much as 500 percent so a good plan will standardize pricing and limit how much the pharmacist can mark up a generic drug. Nevertheless, the potential for overall cost savings is enormous, generally 80 percent less, when employers are aggressive about steering employees to generic drugs.
Why do people fear generic drugs?
Historically, the main reason consumers shied away from generics is that they questioned the therapeutic effectiveness of a generic compared to the brand-name drug. Although some consumers claim that a generic drug does not have the same effectiveness as the brand name, there is, in fact, very little difference between the two. Today, employers and employees are aware of the equivalency of generic drugs so there is much less discussion about value. In fact, the change in the public perception of generics is stunning. They are no longer perceived as unsafe knock-offs, and market share for generics is projected to be around 53 percent.
Does lowering prescription costs for employers increase costs for employees?
Today, almost all health plans use higher co-payments on branded drugs to push employees toward generics. However, some health plans are eliminating co-payments or out-of-pocket costs for generics altogether. In some cases, health plans are requiring documentation from physicians that their patient actually needs a brand-name drug when a generic equivalent is available. Some plans won’t cover a brand-name drug if a generic is available.
Are there any prescription drug plans that benefit the employee?
An increasingly popular approach is a tiered plan where consumers are no longer charged the same out-of-pocket costs no matter what prescription they choose. Under these plans, the generic may cost a $5 co-payment, while the brand-name drug would cost $10 and a newer, more expensive drug would cost $15. Under the old system there was no financial incentive for the consumer to pick a lower cost drug over a name-brand drug. Many employers are even waiving the employee cost for certain medications for conditions such as diabetes or heart disease because they no longer want to risk the financial implications that deter employees from complying with the treatment plan.
SALLY STEPHENS is the president of Spectrum Health Systems. Reach her at Sally.Stephens@spectrumhs.com.
As financial institutions deal with the current struggles of the market, there has been much discussion in the media about the capital position of various banks and lenders. The information is ever-changing and can be confusing to business customers.
The truth is, business customers should not instantaneously get nervous if their bank has a weakened capital point, according to Jim Geuther, manager of commercial banking for FirstMerit Bank, Cleveland. The responsibility rests with each client to determine if their banking relationship has been impacted by a change in their bank’s financial condition. And, if the impact is meaningful enough, to look for a new financial institution.
Smart Business spoke with Geuther about how capital position affects a bank, how those changes affect business customers and the warning signs for which a business customer should look.
What does it mean for a business customer if a bank has a weak capital position?
For starters, a weakened capital position should not be interpreted as the first step toward closing the bank’s doors. Rather, it does mean the institution must carefully protect its equity from further deterioration, as its capital cushion has been compromised. This situation does make an institution more vulnerable to change and may increase the likelihood of it being acquired. To assess the capital position of a specific bank, one can review the bank’s financial statements, speak to an industry expert or financial adviser, or simply ask his or her banker for insights.
Are there warning signs of a weak capital position for which business customers should look?
In order to protect their equity position from further erosion, banks with weakened capital positions are likely to behave differently with their customers. Business owners will typically experience this inconsistency at the time of their annual financial review. This process should ordinarily follow a consistent, predictable pattern of reviewing financial statements in order to assess current and potential credit risk. Instead of asking the usual questions, banks in a protective mode will undoubtedly probe further than they have previously. This is clearly a warning sign to business owners. It is similar to a client who goes to see his or her physician for an annual exam. If he or she sees the doctor and, instead of asking the routine questions expected during an annual examine, the doctor begins to order up an EKG, chest X-Ray and start to order surgery, it is a signal that there is something wrong. At this time, it is important to get a second opinion because there may be a deeper reason for the change in disposition. A business customer should look for a bank that shows consistency in its credit process.
What does ‘tightening credit standards’ mean to the business customer?
According to a survey conducted by the Federal Reserve this year, up to one-third of all U.S. banks had tightened their credit standards. ‘Tightening credit standards’ simply means that banks are likely to operate more conservatively. For business customers, it means banks are going to ask more questions when taking credit applications. They want a deeper understanding of the company’s business before they lend money. As far as the banking industry is concerned, banks all operate similarly; the money is the same, the products are similar, and they all tend to operate within a box.
Depending on the status of the market, there will be times where banks are more aggressive and willing to do business on the edge of the box. That is what we saw during the recent subprime period. Banks were operating on the far edges or outside the box. Now, they are feeling the backlash of operating so aggressively and are currently tightening up lending standards, becoming more conservative. Banks still have money to lend, they are just being more careful and staying toward the middle of the box while they are lending.
Should business customers look for a new bank if their bank is being merged with another bank?
Again, the first instinct should not be to run. Often the bank that is taking over will do numerous things for the business customer to keep his or her business. It is simply time to evaluate if all the needs of your business are being met.
Not all mergers mean bad news for business customers. In some cases, a merger simply means a new name on the sign. In other instances, it may mean good news for business customers. It may introduce clients to new products or capabilities they did not have at the previous bank. As with any change, there may be aspects that business customers do not enjoy or benefit from. A merger may cause pricing to change, costing the business customer money. If customers feel their needs are being met and has a good relationship with their banker, there may be no reason to change.
However, regardless of the capital position or bank name, I encourage business owners to assess the overall service and value they are receiving from their bank to ensure it is an equal exchange. Just like with a regular physical, there is nothing wrong with getting a second opinion about the health of your banking relationship.
JIM GEUTHER is a manager of commercial banking for FirstMerit Bank. Reach him at (216) 694-5683 or email@example.com.
The 2003 workers’ compensation (WC) reforms created an extremely competitive workers’ compensation market in California. Numerous new insurance carriers emerged on the scene and a fierce competition among them has been pushing the rates down to new, unprecedented levels. Many businesses enjoy rates as low as 50 percent of the prereform levels.
Business owners noticed the extremely competitive market and are actively shopping their workers’ compensation insurance for lower rates. There is a catch, however, says Elizabeth Lisek, CIC, a commercial insurance broker with Westland Insurance Brokers.
“While lowering the rates is extremely important for any business owner and should be taken seriously, there is a hidden factor that may affect the business’s long-term savings a lot more than just a lower rate. That factor, often misunderstood by business people, is called Experience Modification (X-MOD) and is calculated by the Workers’ Compensation Insurance Rating Bureau (WCIRB),” says Lisek. “In order to truly save money on the WC insurance for the long term, one needs to have a basic understanding of the X-MOD to make wise decisions about their WC insurance and be proactive in the business’ safety and accident prevention program.”
Smart Business spoke with Lisek about the role of Experience Modification in the workers’ compensation package and how business owners can take an active role in lowering workers’ compensation costs.
What is the Experience Modification (XMOD) factor?
The X-MOD is calculated from loss information that insurance companies are required to submit to the WCIRB on an annual basis. The WCIRB calculates an XMOD for each employer provided the business meets a required premium threshold to qualify for an X-MOD. The formula takes into account reported paid losses, claim loss reserves and payroll amounts. It uses data of the past three years, but the most recently completed policy year is excluded. For example, an X-MOD effective in 2007 would use policy data from the policies effective in 2003, 2004 and 2005. The data from the 2006 policy would not be used until the 2008 X-MOD, when the data from 2003 would drop off.
Why is the topic of Experience Modification often overlooked by business owners and how does X-MOD affect businesses’ workers’ compensation premium?
While employers commonly realize that a lower X-MOD is somehow a good thing, many don’t make the connection between this number and their premium costs. Let me illustrate the tremendous savings a business may utilize by keeping its X-MOD at a low level. Let’s assume that an unmodified premium is $100,000. An X-MOD of 100 would be neutral as the premium would still be $100,000. With an X-MOD of 1.25, the rate is surcharged by 25 percent (the rate used by the workers’ compensation carrier is now multiplied by 1.25). The new premium would be $125,000. On the other hand, if the X-MOD is .75, there is effectively a 25 percent discount applied, so the $100,000 premium would now become $75,000.
It’s easy to see the tremendous surcharge, or savings, realized by the business depending on its X-MOD; in this illustration, the difference between the two factors translated into the $50,000 difference in premium. Such savings are hard, if not impossible, to realize just by cutting the rate.
What can a business owner do to effectively lower the X-MOD?
As I mentioned earlier, the X-MOD looks at the past loss history of the business. An employer may become more sensitive to the safety issues by creating safety programs and even monetary incentives to reward accident free teams/workers. Being that the number reported to the WCIRB is not just paid claims, but also all the reserves, it is extremely important to monitor the claims and close them as soon as possible, as well as make sure that the amounts reserved are kept at a reasonable level. In addition, since the X-MOD is calculated based on data reported to the WCIRB by an employer’s past insurers, incorrect or incomplete information can cause incorrect X-MODs. It may be worthwhile for employers to review the X-MOD calculations to make sure they are complete and accurate.
Why is it important to choose the right insurance broker to obtain the long-term savings on the workers’ compensation insurance?
The right broker can make a huge difference in the final cost of the business’s WC insurance. The broker should monitor all the outstanding WC claims and make sure claims are closed as soon as possible. If a claim stays open, the broker needs to discuss the reserves with the adjusters. The right broker can be successful in getting the reserves lowered, as well as in closing the claims.
The right insurance broker should not only be able to find you the best rate among different carriers, but should choose the company that will handle your claims quickly and efficiently and should also stay involved in monitoring your claims on your behalf.
ELIZABETH LISEK, CIC, is a commercial insurance broker with Westland Insurance Brokers. Reach her at (949) 553-9700 or firstname.lastname@example.org.
Many health plans today give consumers a choice as to how they would like to spend their health care money. This means that consumers have a choice as to which doctor they see or which hospital they will visit for a service. This is a wonderful opportunity for consumers as long as their health plan supplies them with the information needed to make educated health care decisions.
Often, it is the nature of a consumer to make decisions based strictly on cost. Consumers are looking for the most bang for their bucks. This is not always the best way to choose health care services, says Edward McCallister, chief information officer for UPMC Health Plan. A consumer should never separate cost and quality and view each as a separate entity, says McCallister. It is the role of the health plan to make sure that the consumer understands the importance and overall effectiveness of viewing both cost and quality as one.
Smart Business spoke with McCallister about how increased access to information impacts health plans and consumers.
Does a health plan have a responsibility to give consumers information about both the cost and quality of health care?
As a health insurer, a health plan has access to an abundance of data related to health care and consumer options. Insurers are also responsible for the health dollar for many consumers. Therefore, it is necessary we provide consumers with as much information as possible to help them through the decision-making process, providing them with options for the best care. It is also important that we provide the consumer with an understanding of the costs and services of health care.
Is value the best approach when it comes to health care services?
In a consumer-driven market, it is difficult to assist consumers in understanding the significance of the overall picture. Taking a holistic view of health care is how both business owners and consumers should approach health care decision-making. Often, people only consider health care when they are ill or in need of services. It is more effective if business owners and consumers take a preventative approach to health care. Wellness programs and preventative measures significantly decrease overall health care costs. This may be the first step to decreasing the bottom line of costs for consumers.
For instance, one needs to consider many factors when choosing a health care facility. When choosing between one hospital and another, you may not be comparing apples to apples. There are hospitals that specialize in certain services, there are different specialized doctors at each hospital, and there are varying volumes of services. These variables must be taken into consideration when making comparisons.
Should a health plan encourage consumers to take a more active role in the health care process, and how can that be done?
The health care system has changed significantly in the past few years. Today, employers are requiring that employees take a more active role in their health care services and spending. This means that employees must receive as much information as possible from their health plan to make informed decisions.
One example of how they can become more informed is to look for an insurer who can provide them with online tools. This gives the consumer access to information 24-7. It is also important to have different mediums through which to access information. A consumer should have the ability to utilize online, telephonic and on-site access.
Can there be true transparency in health care information?
Yes, there can be transparency, but there are still obstacles that need to be overcome. The first is, even with transparency, it is often hard to make valid comparisons between health care facilities because the services are not always the same in each hospital. Another issue with transparency is that much of the data we use are not current. There is a need for more real-time data so that consumers can weigh all factors and make informed decisions.
For health care consumers, it can be dangerous to use one factor, such as cost, to make determinations about purchasing services. There is no ‘blue-light special’ when it comes to health care. Consumers need to determine their needs and find a health care service that meets those needs with quality service at an acceptable price. It is the responsibility of the health care industry to supply the education and information for consumers to make the appropriate decision for their needs.
Are insurers willing and/or able to offer cost and quality information to members?
Actually, it is not a matter of whether health care insurers are willing to offer this type of information to consumers. We are obligated to do so. Consumer-directed health plans are placing the dollar in the consumers’ hands and asking them to make decisions. Therefore, they are entitled to as much information as we have so they can make the best decisions for their needs.
EDWARD MCCALLISTER is the chief information officer for UPMC Health Plan. Reach him at email@example.com or (412) 454-7710.
Experts predict that close to $3 trillion will be spent annually within the health care industry over the next few years, says William Gedman, vice president, Quality Audit, Fraud & Abuse with UPMC Health Plan. That much money is sure to attract a criminal element. Certainly, the vast majority of both physicians and members would never seek to defraud. Nonetheless, the industry estimate is that 3 to 10 percent of all health care claims are fraudulent.
The health care claims billing and reimbursement process, medical billing and coding convention, and compliance requirements in particular are so complex it almost fosters abuse, says Gedman. It can be extremely difficult to detect fraud or abuse in this system because of the volume of transactions, billing and coding complexities and ‘creative’ abusers.
Smart Business spoke to Gedman about how employers and employees can protect their health care assets.
What are examples of fraud and abuse?
There are numerous types of health care fraud and abuse. Fraud can include identity theft resulting from stolen insurance cards, drug-seeking behavior on the part of the member or drug diversions on the part of health care providers. Other types of fraud or abuse include medical providers billing for services not rendered or billing for more complex services than were actually performed. Fraud can also occur at pharmacies. For example, they may substitute generic drugs for brand-name drugs or charge an insurance company for drugs never picked up by its members.
In the health care business, there are so many transactions being processed it is often difficult to detect fraud prior to payment being sent to a provider. Once a reimbursement is made, it can be more difficult for an insurance company to recover inappropriate payments.
How can managed care organizations crack down on fraud?
It is important to establish strong internal controls around the claims payment process. There should also be a Special Investigations Unit, which is actually a requirement for many insurance carriers. An SIU should conduct data mining and analysis.
Considerations should be given to installing and monitoring fraud detection software, which can identify trends or red flags that require further investigation. Cooperation with regulators and law enforcement entities that fight fraud is also essential.
Health care providers should be routinely educated on industry medical record and coding requirements, as well as trends and potential fraud and abuse, and how it can be detected. Managed care organizations should also work to educate members about types of fraud and ways to identify potential fraud and abuse.
What steps can an employer take to protect employees from health care fraud?
Education is a must. People need to understand what types of potential fraud or abuse are possible. Employers should be very selective and demanding when they choose an insurance carrier. They should make sure their insurer has strong controls in place to detect fraud and the infrastructure in place to investigate and prevent fraud and abuse.
How can an employee detect and prevent potential fraud or abuse?
Awareness is essential for protection against fraud. Employees must educate themselves about potential types of fraud and abuse and play an active role in their health care. They must review their Explanation of Benefits and understand all services rendered. This is the only way to determine if you and your insurance company are being appropriately charged for services or supplies/equipment.
In many instances, people do not question medical providers because they are regarded as authority figures. Employees should never be afraid to ask physicians about treatment options and prescription choices. Those receiving services should fully understand their treatments. This will help them get the best possible care and understand the services for which they and their insurance company are paying.
What should members do if their insurance information is stolen or they feel they are being charged incorrectly?
Employees need to treat their insurance information like they treat their credit card information. They should not share their member identification numbers with others or use their information on unsecure Web sites. If this information falls into the wrong hands, billing fraud could occur, and it is possible that inappropriate information could subsequently appear on their medical records. Future treatment or insurance coverage could be affected by this inaccurate medical record information.
Members should contact the insurance company immediately if information is stolen or if they disagree with what has been billed. In addition to customer service lines, insurers should have a fraud and abuse hotline where people can call in with issues regarding suspected fraud and abuse. The information should be kept confidential and tips can be anonymous.
How does fraud and abuse affect health care costs?
The obvious answer is increased premiums. Someone has to pay for fraudulent claims. However, increased costs also occur because of the administrative expense required to detect and investigate suspected fraud and abuse. This causes increased health care costs for everyone.
WILLIAM GEDMAN is vice president of Quality Audit, Fraud & Abuse with UPMC Health Plan. Reach him at (412) 454-5675 or firstname.lastname@example.org.
Insurance industry surveys have confirmed that consumers would like to purchase all the insurance they need from the same insurance agency/broker. With all the different types of insurance and carriers out there, this is much easier said than done.
Most firms specialize in either personal, commercial or employee benefits insurance. Commercial insurance providers are often excited to inform people they do not provide personal insurance coverage, says Jim Sim of Westland Insurance, as if they have graduated from the personal insurance industry.
If a firm does provide several types of coverage, it is often difficult to find any firm that has adequate staff and services, says Sim. There are more than 30,000 agencies that provide insurance; 90 percent provide personal lines insurance, such as homeowners and auto, and only 10 percent provide commercial insurance or employee benefits insurance.
Smart Business spoke with Sim about one-stop shopping for insurance and the benefits of one firm providing all types of coverage.
What should a consumer look for in an insurance firm?
While consumers would like a firm that provides many different types of insurance, they do not want a personal lines agency providing commercial insurance. Often, the problem for consumers is finding a firm that provides all types of coverage from numerous providers.
A consumer should ask a firm if it provides all lines of insurance and how many employees staff each department. Proper staffing is crucial to great service. You should also ask how the employees communicate among the team. You may end up with three different insurance companies, but you want one firm that communicates well with all the companies, among themselves and with you. This ensures everyone is on the same page and that you are receiving the best coverage possible.
Finally, you want to look for a competitive firm. Insurance is a competitive industry, and you want to make sure the firm is always offering the best coverage for a competitive price.
What types of insurance should a consumer make sure a firm provides?
The three main types are personal, commercial and employee benefits.
Personal insurance: This is a very common type of coverage and includes, but is not limited to, homeowners insurance, auto, umbrella, yachts and planes.
Commercial insurance: This type of insurance is common for business and property owners. It includes liability, auto, workers’ compensation, commercial property and umbrella insurance.
Employee benefits: This type of insurance is more specific for business owners. It includes group health, long-term disability, 401(k), etc.
What is the benefit of using one firm to provide all types of insurance?
If you can use the same firm for all types of insurance, it will know you and your account. The team with which you work will know where personal stops and business starts. Using a firm that provides all types of insurance provides coordinated insurance and coverage. This helps prevent gaps or overlaps in coverage. With a team that works together to make sure you have the correct insurance, one receives efficient and cost-effective coverage. Discounts may also be offered to consumers who purchase different types of coverage from the same insurance company or provider.
Why is it important for business owners to research insurance firms and look for good customer service?
As a business owner, you want to make sure all of your assets personal and commercial are properly covered, as you have so much time and money invested in these items. With a professional firm, a consumer will be able to consult a broker or insurance agent to answer any questions you may have. You do not want to have to call an 800 number to get service from numerous different firms in various places and time zones most are out of town, state or even in another country. Rather, you want one contact team that can be reached at one number.
If you are using numerous providers from different insurance firms, is it difficult to switch to one firm?
No. The new firm should be able to review your needs and assist in the transfer, taking pressure off of you, the business owner. Once you have selected a firm, you want to make sure you meet with your team to conduct annual reviews to ensure new assets are not overlooked or forgotten. With a constant contact at an insurance firm, you can make a simple phone call or send an e-mail prior to each purchase to make sure you are always covered. With a single firm, a daunting task, such as selecting insurance providers, becomes simple.
JIM SIM is president of Westland Insurance Brokers. Reach him at (619) 584-6400 or email@example.com.
Anew bill, the Employee Free Choice Act (EFCA) pending in Congress, would make it much easier for employees to join unions, says Michael J. Stief III, a partner in the Pittsburgh office of Jackson Lewis LLP.
“It is important for business owners to be aware of the legislation as the 2008 elections approach,” says Stief. “This is likely to be a highly debated topic, and business owners need to be educated on the matter.”
Smart Business spoke with Stief about what changes the proposed legislation would bring and how these changes would affect employers and employees.
How does the Employee Free Choice Act differ from current law?
EFCA is an attempt to change the existing law in three specific ways.
Under the current law, employers presented with signed union authorization cards can require a secret ballot election supervised by the National Labor Relations Board (NLRB). This gives employees the right to vote in complete privacy, free from any coercion. EFCA would require an employer to recognize a union as the collective bargaining representative of the employees when a majority of those eligible employees have signed authorization cards, regardless of the tactics used by unions to get those cards signed.
Another provision of EFCA deals with mandatory arbitration if a first contract between an employer and a union is not reached within 120 days. Currently, federal labor law allows parties to negotiate in good faith. Effectively, this proposal does away with the give-and-take of collective bargaining. EFCA allows an arbitrator to step in and impose a contract no matter how unreasonable the union’s demands may have been.
The third change would increase the penalties for violations of the law. As proposed in EFCA, the penalties would change the basic purpose of the National Labor Relations Act from remedial to punitive. These would include penalties of up to $20,000 per violation.
How will these changes affect businesses?
If EFCA is signed into law, it makes every employer in this country susceptible to union organizing activities. If you have 10 employees and six of them sign union authorization cards, you are unionized regardless of the tactics the union used to get the cards signed. There is no election.
The bigger concern for employers is the arbitration provision of this legislation. First contracts take months, if not over a year, to negotiate. Every single word needs to be agreed to by both parties in such agreements. This legislation would ultimately place the responsibility for setting all of the terms and conditions of employment in the hands of an arbitrator who may know nothing about the employer’s industry, profit margins and other business considerations. In reality, an arbitrator would dictate how an employer is able to compete in the marketplace.
How will this act benefit unions?
Unions are using the EFCA as a tool to help bolster their membership ranks, thus increasing revenue they receive from members. Organized labor has been supporting this type of legislation for years. Labor unions say EFCA is needed because the secret ballot government-conducted election process under the NLRB is flawed and that employers discriminate against employees who attempt to organize. That is simply not true. This legislation is all about making it easier to organize employees.
Why should employees be concerned?
First, there may be increased pressure for employees to sign union authorization cards. For example, today if an employee signs a union authorization card because a tremendous amount of pressure is applied by coworkers or the union, that employee has the right to change his or her mind in a secret ballot, government-conducted election. That right would be taken away under EFCA.
The other effect on employees deals with the arbitration provision. It is risky in the private sector to allow an outside arbitrator to set the terms and conditions of employment for an employer. If this legislation passes, over time, I believe you will find more employers looking to move their operations abroad which, in the long run, is not good for employees.
What should employers be doing now?
No. 1, they need to get involved. Until recently, businesses were unaware of this legislation. Now that it is starting to get some publicity, many people are very concerned about its provisions. Employers need to contact their U.S. congressmen and senators to voice their opposition to this legislation.
Secondly, it is now more important for employers to conduct a vulnerability assessment. They must take a look at their policies and procedures, their employee involvement programs and communication vehicles in order to help foster a positive work environment that would make a union, or any other outside third party, irrelevant to their work force.
MICHAEL J. STIEF III is a partner in the Pittsburgh Office of Jackson Lewis LLP. Reach him at firstname.lastname@example.org or (412) 223-0138.
While this may save companies money on rent, it creates new expenses and plenty of storage challenges.
The most common challenge that business owners face is the explosive growth of storage needs. E-mail and electronic documents are replacing traditional paper documents. This requires companies to store, backup and archive “e-docs.”
It also requires companies to protect the information. When electronic documents travel outside your building on laptops or USB keys, they must be encrypted for protection, says Martin Sizemore, chief technology officer for Premier Technologies.
Smart Business spoke with Sizemore about changes in data storage and how companies can store data concisely and reduce storage costs.
How has data storage changed?
There have been a few major changes in virtualization, security, improvements in backup/recovery and dramatic drops in cost.
Virtualization of storage simplifies applications that rapidly use storage like e-mail, document archiving or media applications. It solves the dilemma of small chunks of wasted storage that are hard to reuse due to outdated storage management software.
Security is a top issue. Storage vendors are beefing up protection mechanisms and including security software with new storage systems. The big improvement in backup and recovery software is encrypting backup tapes prior to off-site storage.
Costs for storage are falling as new software applications are demanding growth. This shift in storage to commodity prices is good news for small to medium businesses that want to scan, organize and store all business documents in electronic format.
How can companies reduce the cost of data storage and reduce complexity?
Companies can reduce the cost of data storage by developing a strategy designed to address its overall IT architecture, with a special focus on identifying key corporate information, the value of that information to the business, the cost of protecting and restoring that information and, finally, retention policies for that information. Ironically, many companies retain years of customer orders but allow the immediate destruction of e-mail messages that may be more important for legal defense or meeting regulatory requirements.
Backup systems and recovery processes are key to reducing data storage complexity. To make these things successful, companies must test them frequently. An excellent backup and recovery process includes multiple copies of the backup tapes.
How can companies consolidate stored data?
There is physical consolidation or logical consolidation. In physical consolidation, multiple disk drives are combined into a storage area network, or SAN. This approach simplifies backup and recovery and solves the age-old problem of reallocating files when they become too large for one disk drive. The SAN software simplifies management of the storage volumes.
Logical consolidation is a good choice for companies that already own storage systems that are from multiple hardware vendors or its servers have storage that is underutilized. Logical consolidation creates a ‘virtual’ storage area network using either storage management software or a special storage management device. Logical consolidation helps companies avoid the rip-and-replace approach and allows an easier transition to physical storage consolidation in the future.
Why is it important for companies to keep up with changes?
Customers are buying network storage across multiple tiers in order to cost-effectively manage huge data volumes and satisfy long-term data retention and regulatory compliance requirements. Rapidly changing laws require that companies pay attention and make appropriate changes to protect consumer data. These laws require the disclosure of data loss, new procedures for archiving e-mails, abiding by SOX or HIPAA guidelines, and business continuity planning.
Storage was once viewed as merely a part of the computer; today it is a valuable asset of the business that often contains intellectual property worth guarding.
What regulations govern the different types of data storage?
Consumer privacy protection laws are causing Congress to change data storage laws rapidly. In public companies, owners should seek assistance on Sarbanes-Oxley compliance for data storage and auditing. In health care, special regulations on data storage, movement and auditing protect the privacy of patients. In small to medium businesses, owners should seek assistance from their certified accounting professionals.
Reliability is key when dealing with large amounts of data storage because restoration times can turn into days, not hours. Clearly understanding the cost of unplanned downtime can offset the desire to add storage without the adequate ability to restore it in the event of a loss.
MARTIN SIZEMORE is the chief technology officer for Premier Technologies. Reach him at email@example.com.