Dispelling 5 myths of health care’s narrow network plans

As the health care landscape continues to change, consumers are seeing an increased presence of health care options known as narrow networks.

In 2007, narrow networks represented 15 percent of insurance plans; that number grew to 23 percent by 2012. And, in fact, 70 percent of the Affordable Care Act exchange plans are narrow network plans, according to Anthem BlueCross BlueShield.

These networks go by a lot of names — skinny networks, focused networks, exclusive networks, small networks and tailored networks — but all refer to health care plans that feature a tighter network of doctors and hospitals, which translates into greater savings for plan sponsors.

Narrow networks also can be an excellent choice for your employees if they understand what hospitals and doctors are in the network and can separate myth from fact.

Smart Business spoke with Brian Fallon, regional vice president of network management, payor relations and analytics at HealthLink, about how narrow networks really work.

What kind of savings do narrow networks bring?

Narrow network plans cost between 13 and 17 percent less than comparable plans featuring wider networks, according to Politico.

When you apply those savings to average national annual premiums, the Henry J. Kaiser Family Foundation found that it results in an annual reduction of between $783 and $1,024 for single coverage, and between $2,188 and $2,862 for family coverage.

What are the biggest myths about narrow networks, and what is the reality?

There are a number of common misconceptions about narrow networks.

  • Myth 1: Narrow networks are bad for employees. Narrow networks don’t just provide savings for employers; those savings reach employees as well. The doctors and hospitals in narrow networks also are just as high in quality as those out of network. In fact, the providers in narrow networks have been carefully selected for their ability to deliver high-quality, integrated care.
  • Myth 2: You can’t see specialists if you have a narrow network. Narrow networks include a variety of quality specialists and health care providers.
  • Myth 3: Expensive health care is better health care. There is little to no correlation between the cost of a given health care service at a particular provider and the actual quality of that care, according to a Health Affairs study.
  • Myth 4: Communicating a shift to a narrow network at your company is hard. When equipped with the right information, changing to a narrow network is manageable. But information is key; stakeholders need as much information as possible about changes and available health care plans in order to make the right decisions. In fact, many narrow networks are only about 10 percent tighter than the typical network, so the medical providers your employees are familiar with likely will still be in network.
  • Myth 5: Employees want broad, expensive networks. Narrow network plans are growing in popularity, and a major factor for this is the lower price associated with these plans. Cost is a top priority for employees when making decisions about which health plan to select, according to a 2011 WellPoint study. That same study found that 50 percent of consumers paying the full cost of their premium are willing to select a narrow network in exchange for lower premiums.

It’s important to remember that narrow networks can benefit both consumers and employers with reduced-cost health care plans while providing excellent care.

Insights Health Care is brought to you by HealthLink

How to empower employees to manage their health care costs

While health care costs continue to rise, recent studies show that almost half of those costs are either unnecessary or otherwise avoidable. To reduce those expenses, more organizations are making sure their employees are empowered to make better health care choices on their own.

“When employees understand their health insurance, they can make good decisions that benefit themselves and their employer,” says Veronica Hawkins, Medical Mutual Vice President, Government Accounts. “That’s why it’s important for organizations to ensure their employees are using all the tools available.”

Smart Business spoke with Hawkins about why these should be a central part of every organization’s health care benefits, what types of tools may be found and how they can make sure employees are using them effectively.

Why are these aids important?

As the cost of health care continues to rise, it’s getting more difficult for organizations to keep the coverage they want to provide for employees. In the last couple of years, consumer-driven health plans have become a popular option. They encourage employees to take a more active role in how their health care dollars are spent.

But for employees to be truly confident in their decisions, they need the right tools to understand cost and quality. In addition to helping employees make more informed decisions, these aids can have a direct impact on an organization’s bottom line.

What tools should employees be using?

Useful aids available today really put employees in control so they can make informed decisions. Organizations should take advantage of every chance to encourage their employees to put them to use. Beyond simply looking for a doctor in their network, employees now can better manage their health care expenses.

For organizations with consumer-driven health plans, employees are more conscious of how much they spend on health care. In the last few years, more employees are accessing their plans online or through mobile devices. That helps them keep track of their expenses more easily, and know how close they are to reaching their out-of-pocket maximum.

There are also tools available to help employees manage their prescription drug needs, either directly through their insurance carrier or through a pharmacy benefit manager. Employees can use these aids to order their medications online, as well as research options that could save them money, such as generic alternatives.

How are the types of tools evolving?

They are more focused on transparency. Today, consumers want to do their own research and compare their choices before making an expensive purchase. Health care really isn’t any different. As employers shift more health care costs to employees, the toolbox needs to enable choice and provide transparency in costs and quality.

Education is a huge part of the process. To make good decisions before having a surgery or procedure, for example, employees need to understand their treatment options and how their plans would cover them.

We’re always working to give our members better tools to support their health care decisions. Next year we are introducing a new platform that we think will help them select doctors and hospitals in the network, compare costs and evaluate quality for any medical services they may need. Organizations and their employees need that kind of information to make truly informed decisions.

What is the best way to promote the tools?

Organizations need to have a multi-channel approach for engaging their employees. For example, a health care insurance provider may partner with employers to create customized approaches that drive employee engagement. These approaches are only valuable when employees know of them and understand how and when to use them. Those efforts are most successful when organizations strategically partner with their insurance carrier to raise awareness and help employees plan and use their coverage more effectively.

Insights Health Care is brought to you by Medical Mutual

How executive concierge health care ensures top leaders get needed care

Companies today, large or small, cannot afford to take the health of their leadership teams for granted.

The challenge facing many companies is how to help executives — who face a heavy work commitment — find the time necessary to do the equally important task of taking care of their health.

This has led to the development of a new set of services, executive concierge health care, that allow top executives to have streamlined access to high-quality, efficient care.

“Companies that offer executive concierge health care services to their executives are making a statement that the health of their executives is important,” says David Weir, president of UPMC WorkPartners, part of the UPMC Insurance Services Division. “By offering these services, a company ensures that their executives get the care that’s needed and the leader can focus on successfully leading the company.”

Smart Business spoke with Weir about the concept of executive concierge health care services and why companies are increasingly focused on executive health.

What are executive concierge health care services?

Executive concierge health care services sounds like a fancy concept, but, basically, it is a convenient, efficient and effective way to assist and support a busy executive in the management of his or her health.

Executives appreciate receiving preventative exams, health consultation and advice in one day. This enables an executive to receive all the recommended tests or procedures needed based on age and gender. These tests can include vision testing, audiograms, comprehensive laboratory testing, pulmonary function testing, EKGs, bone density testing and chest X-rays.

The busy executive can secure the preventative care needed in one day and in one place, as opposed to taking multiple days and time off work for appointments, which can often lead to the executive not getting the care required to maintain his or her health.

In addition, offering a private waiting area with amenities such as Internet access enables a busy executive to keep tabs on work while receiving essential medical services.

After the initial visit, what is the benefit of executive concierge health care services?

Coordination of care, priority appointments with specialists and direct access to medical professionals are all equally important benefits of executive concierge health care services.

Executive concierge health care services facilitate coordinated care by making it easy for the executive to communicate with the concierge team 24/7 via phone or email. The ability to make appointments on the same or next business day is another big advantage, as is coordination of specialty and hospital care.

Another benefit for executives is the personal relationship that exists between the executive and the physician and staff. This ensures timely service and personalized attention.

Executive concierge health care services can be customized to fit the specific needs of a company and its leadership. Depending on the plan, extra services can include priority dermatology appointments, travel consultation and vaccination, and services for spouses and domestic partners.

Why would a company want this service for its executives?

It is easy to understand what executives like about these services — the personalized care and attention is a big plus. Experienced doctors primarily deliver executive concierge health care services, and the health care providers typically enjoy developing personal relationships with patients.

Companies that offer executive health care concierge services ensure that their executives receive the preventive health care they need to continue to stay in good health and to lead the organization.

Executive concierge health care services also can be a strategic tool in the recruitment and retention of executive talent and ensuring leaders remain healthy as they lead their organization to success.

Insights Health Care is brought to you by UPMC Health Plan

How small groups can ease into self-funding with a level funded approach

Self-funding is a funding mechanism long used for health benefits, particularly in the large group market with 100-plus members. The Affordable Care Act (ACA), however, is creating a sweet spot for smaller groups who can use level funded self-funding plans to save money and gain control over costs.

“The level funded approach to self-funding is right in the middle of the insurance spectrum. It’s a stepping-stone or hybrid between fully insured and self-funded,” says Abbe Mitze, account executive II at HealthLink. “There are a lot of protections in place that make it feel, look and act just like a fully insured plan, but the platform is self-funded, which brings its own advantages.”

Smart Business spoke with Mitze about why the ACA is making level funded self-funding more attractive, and how your company can take advantage of it.

How is the ACA affecting small groups?

The ACA will be implementing community-rated underwriting for all fully insured small groups in 2016. (Originally slated to start in 2014, transitional relief delayed the effect for the majority of small groups.) A small group currently consists of two to 50 members, but that expands all the way up to 99 by 2016.

With community rating, only age and tobacco use factor into premium rates. That means gender, the health of an employer group and its claims experience and SIC code will no longer be considered in health insurance underwriting.

In addition, the age rating band will be tightened. Health carriers can charge up to seven times more for an older participant; under the ACA it’s only three times more. In fact, the total rating band ranges from four to 14.42. With the community underwriting method, the range will be one to 4.5.

Along with mandated essential benefits, this new underwriting will increase costs. By moving to a community-rated plan, small group employers could see premiums go up 20 to 30 percent.

What is a level funded self-funded approach?

Typically, with self-funding, when employees have claims, the employer group is responsible for funding and paying for those claims each week, with stop-loss insurance to help cover catastrophic or higher claims.

In a level funded or max funded approach, an employer group pays a monthly premium to a third-party administrator (TPA), just like it would pay a health carrier. The TPA handles the administration, which allows the employer to focus on running the business. And if the group has a good medical loss ratio, a surplus could be refunded.

How does level funded self-funding negate community rating?

With a level funded self-funded plan, you wouldn’t have to follow community rating. The TPA can use health as a factor in underwriting, which can result in a favorable premium if your employees are a young, healthy group with great claims experience.

Are there other benefits to this approach?

An employer can avoid some ACA taxes, such as the annual reinsurance fee tax, which is 2.3 percent each year. But keep in mind that even though the plan is self-funded, it still must comply with majority of the ACA.

You also have more transparency. With detailed information on claims utilization and experience from both the TPA and health care network, you can better manage costs through the plan and network design.

If you’re able to actualize savings by moving to a level funded approach, you also can implement ancillary programs like dental, vision or disability to attract employees.

If an employer is considering a level funded approach, how should it proceed?

The first step is to talk to your trusted health insurance adviser, broker or agent. Only some TPAs offer these plans. The basic mechanics are the same, but each TPA brings different components.

For example, one TPA has a strong philosophy about chronic conditions, where they pay 100 percent for the routine care to manage 27 chronic diseases. You’ll need to shop around to find the TPA that fits with your thinking.

You also want to closely examine the contract. For example, you want to ensure the contract provides time for claims to be processed and paid. With some contracts, a Dec. 31 claim has to be paid on Dec. 31.

Insights Health Care is brought to you by HealthLink

How to be ready for this year’s benefit season and make optimum decisions

Open enrollment is starting for many organizations. This is when employees can enroll in benefits, move to a new plan or change their coverage amounts. With all the recent changes in health insurance, organizations are challenged to make sure their employees make informed decisions.

“The conversations surrounding open enrollment are much different than we’ve seen in the past,” says Amber Hulme, Medical Mutual Vice President, Central and Southern Ohio. “Organizations are faced with more choices, and so are their employees. Making the right decisions has become more complicated.”

Smart Business spoke with Hulme about what types of decisions organizations need to make during open enrollment this year, what they can do to prepare and how the process can help their employees become better health care consumers.

What big decisions do organizations need to make?

The first decision is the type of plan. For example, instead of offering co-pay plans with a monthly premium, employers might consider moving to a high-deductible plan that can be paired with a health savings account (HSA). With the HSA route, organizations need to think about funding arrangements and how much they want to give their employees.

Another possible option is defined contribution, which is getting a lot of buzz lately. With defined contribution, organizations give their employees a certain dollar amount every month. The employees then use that money to pay for whatever health plan they choose.

Lastly, there is the funding type. Organizations can choose to be either fully insured through their carrier or self-funded, where they pay their own claims. Self-funded plans aren’t subject to as many of the federal fees that started this year, so that can be a good option for employers that have the cash flow.

How does open enrollment usually work?

There are many variables involved depending on the organization and its employees, so every situation is different. The most significant differences are dictated by what the employees can handle in terms of technology. For example, defined contribution requires employees to have Internet access. So, if most of the population doesn’t have access to a computer, defined contribution probably wouldn’t be the best choice.

Open enrollment meetings are another variable. They are an excellent opportunity for employees to review their benefit information and ask questions. That’s especially important when organizations change plans. But there can be logistical challenges when employees are spread across multiple locations or working different shifts. We always try to accommodate whatever arrangement works best for the organization and its employees.

What are a few best practices?

Every organization wants to know what it can do to make sure employees are using their health care dollars wisely. So once they choose the plans they are going to offer, it’s critical for organizations to educate their employees to be better consumers. But they need help.

Employees have a lot of questions during open enrollment, and they need to be able to call their health insurance carrier or human resources department for answers. It’s the carrier’s job to provide the educational tools to help the organization provide that support. The key is to be prepared.

What else should organizations ask their carrier?

Organizations need to know how options have changed or if plans work any differently. They need to know about new resources their employees can use, such as wellness or disease management programs. They need to know what tools are available to help employees become better consumers, and be familiar with what they can do and how they work.

Having that information ready will help the organization prepare for open enrollment and empower its employees to manage their health care spending.

Insights Health Care is brought to you by Medical Mutual

How to engage your staff and create a more productive workforce

An important part of the supervisor’s role is motivating employees, and it is a major concern for seasoned and new supervisors alike.

What many supervisors may not realize is that there are skills managers can learn to help motivate employees and create greater employee engagement in the workplace.

“Managers play a key role in promoting employee engagement,” says Annette Kolski-Andreaco, manager of Account Services for LifeSolutions, an employee assistance program (EAP) that is part of UPMC WorkPartners’ suite of health and productivity solutions and an affiliated company of the UPMC Insurance Services Division.

“Engaged employees advance an organization’s goals, resulting in a personal and organizational win-win,” she says.

Smart Business spoke with Kolski-Andreaco about how managers can best help their employees become more engaged and, as a result, have a more productive and effective workforce.

What do we know about the level of engagement among American workers?

Fewer than 30 percent of working Americans are considered engaged employees. And yet, when employees are engaged, they find their work more challenging and absorbing.

How can supervisors help raise employees’ engagement levels?

Surveys of employees show they have three universal needs: respect, positive relationships and personal development. Managers need to know that these needs can be addressed and advanced every day in the workplace by their actions and in the practices of the organization.

Daniel Pink writes in his book “Drive: The Surprising Truth About What Motivates Us,” that there are three components of internal motivation that are key to achieving engagement — mastery, autonomy and purpose. When the work environment, through the manager-employee relationship, allows for the development of these three components, internal motivation is often the result.

In simple terms, to actualize autonomy, for example, organizations through their managers can allow for more involvement in decisions about employees’ task choice, deadlines and work teams.

Mastery relates to the universal need for personal development, the human need to move forward and get better at something. Consequently, managers should find opportunities for employees to grow professionally.

Finally, purpose can be operationalized when managers connect employees’ work to how it fits in to the advancement of the organization’s goals and success.

Managers often turn to EAPs for consultation in how to engender more positive engagement among their employees. EAP professionals consult with managers at all levels to assess the issues and can suggest actions that stand the best chance of being effective.

Can you restate those manager tasks more simply?

The three important ways managers can support and encourage employees are first, to demonstrate — both in word and in deed — that the employee’s contributions are valued.

Second, they need to connect the employee to the team and the organization.

Finally, managers need to be on the lookout for opportunities that enable employees to grow, innovate and apply new ideas.

In what ways can supervisors demonstrate that they value their employees’ efforts?

One important way is by presuming that every employee is competent and then treating him or her accordingly.

This is a more positive approach than is usually used. A supervisor also can help employees identify individual goals and then support them in achieving those goals. Recognizing and discussing how individual goals can align with organizational goals is yet another way.

By staying connected with people and showing interest in their lives, a supervisor can increase engagement. Sometimes it just boils down to finding a way to communicate often, express appreciation for people’s skills and work, and acknowledge their achievements and progress every day.

Insights Health Care is brought to you by UPMC Health Plan

How new state and federal laws will impact cancer drug costs

The cost of drugs used to treat cancer has doubled in the past decade — from an average of $5,000 to more than $10,000 per month, according to reports. Organizations will soon see two key pieces of legislation intended to help control how much patients pay for cancer treatment and prevention.

“New state and federal laws will make it easier for people to manage the cost of cancer drugs,” says Veronica Hawkins, Medical Mutual Vice President, Government Accounts. “The laws focus on oral chemotherapy drugs, as well as preventive drugs prescribed to women at a high risk for breast cancer.”

Smart Business spoke with Hawkins about what organizations should know about the new Ohio law known as Senate Bill 99, which requires oral chemotherapy drugs and injected treatments to be covered equally; and the Affordable Care Act (ACA) provision that requires preventive breast cancer drugs to be covered at 100 percent.

What is the purpose of these laws?

For many people, a cancer diagnosis can be financially devastating. Even if employees have health insurance, they still pay certain expenses out of their own pocket. The diagnosis affects employer health care costs, too. Studies show that cancer-related treatment now accounts for 10 percent of the average employer’s health care costs. These new laws relieve some of those financial burdens. While some organizations may see their insurance rates increase, these laws could also help them control their health care costs in the future.

What do these laws change?

Earlier this year, the federal government set new rules for the preventive breast cancer drugs tamoxifen and raloxifene. Those drugs must be covered at 100 percent for women age 35 or older who have not previously had breast cancer but are considered to be at high risk.

In addition, the new Ohio law requires oral chemotherapy medications and intravenous treatments to be covered equally. In the past, the out-of-pocket cost for oral chemotherapy drugs might have been higher.

Are all organizations affected?

Each law is different. The federal law requiring coverage for preventive breast cancer drugs is part of the ACA, so organizations that are considered ‘grandfathered’ may be exempt. To be grandfathered, an organization must have purchased its health plan before the ACA was signed into law and not made any significant changes to the plan since then.

ACA status doesn’t matter for Ohio’s oral chemotherapy drug law. Any organization with a fully insured plan is required to comply.

It’s a little different for self-funded plans, where the employer pays its own claims. If an organization has a self-funded plan, it only has to comply if it is considered a public entity. That could be government, school districts or public agencies, such as parks or water districts. Otherwise, organizations with self-funded plans are exempt.

When does each law take effect?

The preventive breast cancer drug requirement took effect on Sept. 24, so some organizations may have already seen changes in how their claims are processed. Ohio’s oral chemotherapy drug law will take effect with plan years that start on or after Jan. 1, 2015. In many cases, the plan year is not based on the actual calendar year, so it’s important for organizations to verify when they will be affected. Many smaller organizations won’t be affected until their plan is up for renewal in 2015.

What can organizations do to promote cancer prevention?

There are many ways an organization can help its employees prevent cancer. According to research, more than one-third of all cancers are related to lifestyle factors, such as lack of physical activity, unhealthy diets and tobacco use.

Prevention is one of the best weapons against cancer, so it’s important to promote tobacco cessation and facilitate regular screenings. These activities may help promote early diagnosis and reduce the long-term costs of cancer for employees as well as the organization.

Insights Health Care is brought to you by Medical Mutual

How to make time for wellness, no matter the obstacles

The goal of wellness is considered desirable for many. Wellness — pursuing the goal of emotional and physical health — however, is often elusive.

“For a lot of people, the simple fact is, ‘other things’ get in the way,” says Claire Marshall, MS, RD, LDN, a senior health coach for UPMC Health Plan. “Barriers arise for everyone and can be difficult to overcome because people don’t set realistic goals for themselves.”

Smart Business spoke with Marshall about how busy people, such as business leaders, can still find the time to make a commitment to wellness that works for them.

Why is change so difficult?

Everyone has barriers to making changes in their lives that could impact their health and wellness.

We have all heard the excuses and many are legitimate. ‘I’m too busy.’ ‘I get started, but I can’t keep going.’ ‘It’s boring.’ ‘I get discouraged.’ Those things can certainly be true, and if you don’t ask yourself how important it is to change your lifestyle and incorporate wellness into your life, you won’t be able to overcome them.

The question you have to ask yourself is: ‘Why do I want to do this?’

Understand first that making any kind of permanent change is not easy. A positive attitude is required as is a change in perspective. You also need planning, support and reinforcement. Change doesn’t just happen; it occurs in stages and requires thought. Change is really a systematic process of problem-solving and goal setting.

How important are goals to achieving change?

Goals are important, but they must be realistic and attainable. They need to be SMART goals:

  • S is for specific. A specific goal can detail exactly what you will do, when you will do it, where it will happen and whom it will involve.
  • M stands for measurable goals. Goals that include a specific number help you to know whether or not you have met them.
  • A is for appropriate. An appropriate goal is one that fits your long-term plan for wellness.
  • R is for realistic. Realistic goals are ones that you feel confident you have the necessary skills and resources to achieve.
  • T is for timely. If you set a deadline as well as an exact starting date, you clearly define exactly when you plan to accomplish your goal.

How are realistic barriers overcome?

Fears you might have about failing can be alleviated by increased confidence. Confidence can come from educating yourself about what you have to do, learning and practicing new skills and getting encouragement from your friends, family and co-workers.

If you make people aware of your goals, you can develop a cheering section of sorts. You can rely on these people who know what you’re trying to accomplish and who can give you advice, hold you accountable or just provide a needed pat on the back.

Another common obstacle is lack of time. When setting a goal, you need to assess how much time you will allow for obtaining your goal and how much time each day or each week you can devote to working on it. Again, being realistic about how much time you can devote to this each day is essential to success.

Are rewards important?

If you can measure where you are when you start, you can track your progress. Give yourself short-term goals and reward yourself for reaching them. Rewarding yourself is important for each small step you take in changing behavior and pursuing lasting change. This is especially true at the beginning.

Build in encouragement by seeking out the members of your cheering section. Sometimes you just need someone to listen to your struggles or to help create a routine that forces you to be accountable.

Remember, there are lots of opportunities for support out there — be it friends, family, co-workers, health coaches or work site wellness programs.

Insights Health Care is brought to you by UPMC Health Plan

How to help your employees be smart health care consumers 

Think of planning a family vacation — you spend weeks determining where you want to go, and how much you can afford to spend. You ask your friends and family for advice. You read reviews. You look for the best deals and compare prices. And then, once you’re armed with that information, you make a well-informed decision and purchase your trip.

Sadly, when it comes to health care, consumers don’t make the same effort.

“Most health care consumers listen to everything their doctor tells them. They will ask their doctor for a referral and won’t go beyond that,” says Carla M. Flamm, account manager III at HealthLink. “They don’t shop for health care in the same manner in which they make other purchases.”

Smart Business spoke with Flamm about smart health care consumers and where employers fit into the equation.

What is a smart health care consumer? 

A smart health care consumer is actively involved in his or her health care. They make educated decisions that will have a positive impact on their physical and financial health.

It’s maintaining your current health, but then also knowing where to go and what resources to use to make sure you’re well informed to make the right decisions regarding your health care.

Have you noticed consumer behavior that needs to change? 

Although health care consumers are becoming involved — the Affordable Care Act has brought new attention — we have a ways to go. Most consumers believe if something costs more, it must be better. They’re skeptical of the idea of value in health care. They assume because it’s a lower cost, they receive a lower level of care. Or they think with a lower cost provider, they won’t get some treatment they need.

How do consumers become smart about health care? 

Consumers need to understand the importance of maintaining a healthy lifestyle. They should get the appropriate health screenings, take an active role when problems arise and make educated decisions when selecting health care providers.

It’s also important to have a thorough understanding of health plan benefits, including how to maximize those benefits.

If a patient is given a diagnosis, he or she needs to feel empowered to ask questions, get a second opinion and control their care. For example, if you need an MRI, you can get it at a lower cost facility. But it takes a complete shift in mindset to even ask.

Where do employers come into this? 

It’s important for employers to create a health-promoting environment, which starts with upper management. But beyond that, employers can develop wellness programs that positively influence their employees’ lifestyles, which ultimately lower costs.

And again, it comes back to ensuring employees understand their benefits and are aware of the costs and value of those benefits, for both employee and employer.

How can business owners drive employees towards smarter health care decisions? 

Education and showing the costs is a start. Most people lack the incentive to learn how to navigate the health care system and make smart decisions.

Employers also can adopt strategies to try to create that smart consumer. They can make plan changes; offer a higher deductible plan option; create narrow provider networks; offer telemedicine programs; have on-site clinics or incentivized wellness and disease management programs; encourage or mandate use of centers of excellence for complex conditions; and/or redirect care through utilization management programs.

It sounds like a lot of work, so how do employers benefit? 

Studies have shown roughly 30 percent of health care is wasted on unnecessary services. If employers can help create a corporate culture of health and wellness, it’s going to improve that.

By giving employees programs and strategies to make them smart health care consumers, it leads to improved health outcomes, more efficient care, reduced costs and absenteeism, and increased employee productivity, morale and retention. ● 

Insights Health Care is brought to you by HealthLink 

How to plan for new health care spending limits effective in 2015

Health care reform introduced new rules to limit how much people would have to spend out of pocket on health expenses before their insurance kicks in. One rule requires prescription drug costs to count toward the same limit as medical costs starting in 2015. That means many organizations will soon have some important decisions to make about how their health coverage works.

“With medical and prescription drug costs accumulating in the same bucket, it will be easier for employees to reach the ceiling on what they have to pay,” says Amber Hulme, Medical Mutual Vice President, Central and Southern Ohio. “However, it’s a significant change and many organizations will want to evaluate their current plan designs before they renew for 2015.”

Smart Business spoke with Hulme about how the limits work, what they mean for the average employer and what organizations need to do to make sure they are giving their employees the best options available.

What do these limits mean?

They help people spend less out of pocket for certain expenses before their health insurance starts paying at 100 percent. Each state decides what expenses qualify. Depending on the type of plan, there are different limits. Next year, a single person will have a $6,600 limit for standard copay plans and a $6,450 limit for high-deductible plans, which can be used with a health savings account, known as an HSA. The limits for family coverage are double those amounts.

Currently, prescription drug costs don’t count toward the same limit as medical costs. That includes copays, coinsurance, deductibles and other similar charges involved with getting a prescription filled. Next year, all those costs count toward the same limit. If employees reach their limit sooner, the health plan will start paying at 100 percent sooner. As a result, some organizations may see their insurance rates go up.

Will the change apply to everyone?

It will, but the degree of change will depend on the type of drug coverage the organization chooses. If they have a ‘major medical’ plan, medical and drug benefits already accumulate toward one deductible. So whether an employee is getting a prescription filled or visiting the doctor, the costs already count toward the same out-of-pocket limit.

However, a great deal will change for organizations with a copay prescription drug plan. With those plans, drug and medical costs currently accumulate separately, often with no limit on drug costs. For those organizations, benefits will work very differently when both costs count toward the same limit. Some organizations won’t see a change until the start of their next “plan year,” which in many cases is not based on the actual calendar year.

Are there any exceptions?

There are actually two important exceptions. First, grandfathered plans do not have to comply with this limit rule. If an organization purchased its plan before the Affordable Care Act (ACA) was signed into law and hasn’t made any significant benefit changes since then, it is considered grandfathered. The other exception is for “grandmothered” or “transitional” plans, which started last November with President Barack Obama’s “keep your plan” relief. Organizations are actually still exempt from many ACA provisions if they meet either condition.

How should organizations prepare?

These limits could introduce a relatively major change for some organizations, so they may want to reconsider their benefit structure for 2015.

For example, if an organization has a $1,000 maximum out of pocket, it may want to look at raising that limit to help save money on the next renewal. Obviously, organizations will want to make the right choice for the business as well as its employees. But it can be complicated, so it’s important to ask for help. To be really prepared, organizations will want to schedule time with their insurance broker or sales representative to discuss options.

Insights Health Care is brought to you by Medical Mutual