How to utilize captive self-funded arrangements to reduce risk

The worlds of health insurance and financial wealth investment are merging together with captive self-funded arrangements.

These captives also are giving small and midsize employers a way to operate a self-funded group health plan for less risk.

Traditionally, midsized firms, those with 100 to 1,000 lives, have been reluctant to self-fund. While 93 percent of firms with 5,000 or more employees have self-funded health care, only 58 percent of midsize firms chose this option, according to a 2010 report by the Kaiser Family Foundation.

“These arrangements have been around for a while, but they are gaining more ground as small groups look for ways to self-fund with reduced risk,” says Abbe Mitze, account executive II at HealthLink.

Smart Business spoke with Mitze about the benefits of captive self-funded arrangements.

What are captive self-funded arrangements?

They pull together a group of employers — who are either close to each other regionally or have some common thread of industry such as farm implement stores — and put them in the same pool when they buy their stop-loss insurance.

Stop loss insurance is what protects the employer’s plan assets once the claims reach a certain predetermined amount. These policies protect you against an unexpectedly large claims when you self-fund your health insurance.

Each group stop-loss captive has its own unique structure, but they all entail the employers buying individual stop loss policies. The critical mass and structure of these programs provide economies of scale for each employer by providing greater purchasing power.

Due to the risk sharing opportunity that the captive provides, it is also a more efficient model from an insurance purchasing standpoint

By spreading the risk across many companies, employers can find a piece of mind that is priceless. They don’t have to be as concerned about large swings in cost, which is one of the biggest deterrents to smaller group self-funding.

In addition, the captive or insurance broker who manages the captive will take some of those stop-loss premiums and invest them.

If the investment does well, the employer groups in the captive would receive a dividend. You could use that dividend to reinvest in wellness or other health measures that would benefit your self-funded solution.

How does the captive group typically find each other, in order to come together?

The insurance or captives broker would get a concept pulled together, secure the vendor they want to use or who they want to manage the captive, and then go out and find the collective group of employers. They are the ones who explain the concept and what all is involved.

Doesn’t an association or trust plan do the same thing?

It’s very similar. An association or trust comes together to leverage their volume to have more purchasing power in the market. And the same is true for a captive, but then there is this financial component of an additional reward based upon the investments that are made.

What else do employers need to know?

You still manage your health benefits and plan independently, just as you do today as a standalone employer group. The only thing it affects is your stop-loss.

There’s not a lot of administration on the part of the employer group, but you do need to make a small initial investment that provides the starter capital for the wealth management piece. It’s typically a percent of the stop-loss premium.

Who would be a good candidate for a self-funded captive arrangement?

The employer group would need to have a tolerance for self-funding, and also have the capital necessary to make that minimal investment upfront.

Insights Health Care is brought to you by HealthLink

How office design enhances workforce health, productivity

In recent years, the topic of workplace design has garnered attention as a heretofore overlooked way to enhance a workforce’s productivity. Open spaces, common areas, lighting, acoustics and thermal comfort are all part of modern office design, and all intended to enhance worker satisfaction with their environment and improve interactions to increase productivity.

More importantly, workplace design can have an impact on employee safety and health, and that, too, impacts productivity. “Design” also includes workplace policies that promote how office architecture and layout can optimize performance.

“A recent study by the World Green Building Council found overwhelming evidence that office design significantly impacts the health, well-being and productivity of staff,” says Dr. Michael Parkinson, senior medical director of UPMC Health Plan. “You can make a business case for designing and building a healthier environment for employees.”

Smart Business spoke with Parkinson about how office design impacts employee health and productivity.

How does the work environment impact the health and productivity of workers?

Work demands change over time and work environments change along with it. As employees become more sedentary and spend more time in front of a computer, and inside a cubicle, our health will predictably decline. Designing in increased activity, movement and interaction are critical.

Sometimes, what’s needed can be something as basic as a new chair. Also, think about providing a standing ‘swing activity’ workstation so that, on occasion, people can conduct business standing up, rather than having to sit all day. Some companies have introduced regular stretch breaks, brief exercise sessions and even ‘recess’ into work periods to improve cognitive functions.

What design factors impact a workplace?

A number of factors can impact employee well-being and productivity. For instance, the World Green Building Council report cited indoor air quality, which includes increased ventilation, as being capable of improving productivity from 8 to 11 percent. Other factors include thermal comfort, more exposure to sunlight, views of nature, noise and acoustics, and interior layout.

The report also recommended an active design, which includes design guidelines that promote physical activity, as well as access to services and amenities like gyms, bicycle storage and green space to help encourage healthier lifestyles of the building’s occupants.

Design that enables employees to feel more in control of their environment is a big factor. Being in control of temperature can make an employee happier, while also saving energy. Design that maximizes daylight and increases access to windows can reduce the need for electric energy, while increasing productivity and improving sleep patterns.

A building that is uncomfortable, distracting, hazardous or noxious can reduce productivity.

How important is lighting?

A 1997 study showed that while lighting doesn’t directly affect performance, good lighting can enhance the ability of employees to see details clearly and increased visibility has the ability to increase output.

A 1983 study found that low levels of light were connected to low levels of work and social satisfaction among workers. Because office cubicles can block needed light, it is possible that workers could not be exposed to daylight for an entire work cycle.

And we’re ‘hard-wired’ for natural light. In fact, in Europe, all office workers must have exposure to windows. A 2003 study in Sacramento, California, found that employees with the best views were more productive and more likely to describe themselves as healthy and less likely to describe themselves as fatigued.

How important is exposure to noise?

The U.S. General Services Administration has identified office acoustics as a key contributor to work performance and well-being. To achieve acoustical comfort, the workplace must provide appropriate acoustical support for interaction, confidentiality and concentrative work.

Workplace design must allow people to come together without disturbing others, and create quiet areas that are apart from centralized noisy spaces.

Insights Health Care is brought to you by UPMC Health Plan

How to be prepared for the new health insurance tax in 2018

In 2018, the federal government will start a new tax on high-cost employer-sponsored health plans. It’s informally known as the Cadillac tax. According to a recent survey from Towers Watson, many companies are already concerned about the impact the tax could have on their businesses.

“The Cadillac tax doesn’t take effect until 2018, but it’s getting a lot of attention right now,” says Veronica Hawkins, Medical Mutual Vice President, Government Accounts. “Many employers have multiyear agreements with their insurance carriers, so they are understandably concerned.”

Smart Business spoke with Hawkins about how the Cadillac tax is expected to work in terms of thresholds and calculations, what exactly is considered a high-cost health plan and what companies can do to figure out if, or how much, they might have to pay.

What is the Cadillac tax?

The Cadillac tax is a provision of the Affordable Care Act (ACA), which Congress passed in 2010. Essentially, it’s a 40 percent, nondeductible tax on high-cost employer-sponsored health plans. The tax is applied to the amount each employee’s coverage exceeds the annual threshold, which is determined by the IRS. All employers are subject to the tax, regardless of size or grandfathered status. The idea is to reduce the demand for high-cost health insurance plans and encourage carriers and consumers to better control their health care costs.

What does high-cost coverage mean?

Currently, the 2018 threshold for a high-cost plan is $10,200 for individuals and $27,500 for families. Those amounts, however, are subject to change before the tax actually takes effect. In 2019, the threshold will increase by 1 percent plus inflation. After that, it will increase based solely on inflation.

In addition, there are higher thresholds for retired individuals ages 55 and older and for plans that cover employees engaged in high-risk professions. In both of these examples, the threshold can be $1,650 higher for individuals and $3,450 higher for families.

What benefits are included in the threshold?

The amounts combine the values of several different types of health benefits. First, you have the premiums for medical and prescription drug coverage, plus certain types of vision and dental benefits. Then there are certain contributions to health savings accounts, flexible spending accounts and health reimbursement arrangements. Those contributions are included regardless of whether they are made by the employer or their employees. The value of wellness programs and on-site medical clinics can also count as part of the calculation.

Who calculates the tax?

According to current information, companies will be responsible for calculating the tax for themselves. That’s because in many cases, employees can choose from more than one group health plan and insurance carriers may not have enough information to do the calculations. Insurance carriers collect the tax from their customers and pay it on their behalf. Self-funded groups are responsible for calculating the tax and submitting payment. The federal government is expected to give more details about how payments should be submitted.

What do companies need to know right now?

Understandably, companies want to know two things — if they will have to pay the tax and, if so, how much it will be. Unfortunately, there are far too many variables right now to give realistic estimates.

The best advice we can give is for companies to consult with their tax adviser, who can provide additional guidance and help make sure they are in the best possible position once 2018 rolls around. Then talk to your insurance carrier and develop a plan for adjusting your benefits, or your multiyear contract, if the need does arise.

Insights Health Care is brought to you by Medical Mutual

How managing care can improve health care and cut costs

Too often, patients aren’t properly taking medications, following up on care after release from the hospital or correctly managing chronic diseases.

With medical management, utilization management nurses and medical case managers work with members to ensure they get the most out of their health care benefits, says Dr. Robert Sorrenti, medical director at HealthLink.

“Medical management includes utilization management, in which we look at services to make sure they are medically necessary so inappropriate medical services can be eliminated,” Sorrenti says. “It also includes disease management, putting a focus on people who have high-risk conditions, such as cardiac disease or diabetes, better managing drivers of the cost of care.”

Smart Business spoke with Sorrenti about medical management and how to encourage employees to use the available services.

What is medical management?

In a broad sense, medical management addresses the use of services and their appropriateness according to medical standards, the quality of members’ experiences as they receive health care and ultimately the cost of the care. For example, if someone uses the emergency room multiple times in inappropriate ways, a case manager might approach that person about finding a primary care physician.

Medical management strives to make sure physicians are following accepted standards of care and doing appropriate tests. It’s not only about saving money; it helps members avoid being exposed to unnecessary services.

How would a utilization manager interact with someone with a chronic condition?

That patient might be impacted in a number of ways. If you’re admitted to the hospital, you or your provider would let the utilization management team know. The utilization management nurse would contact your physician and hospital to learn why you were admitted and what’s the plan of care.

As your hospital stay continues, the UM nurse makes sure you are in the right setting for your needs and that you aren’t staying in the hospital too long.

As your discharge approaches, the UM nurse considers what services you need after discharge. Do you need to go to a rehabilitation facility or skilled nursing facility? Do you need support services at home? Do you understand what your benefits are for these types of care?

The UM nurse helps arrange for those services within your benefits, making sure you use network providers and minimize out-of-pocket expenses.

After discharge, a case manager might look for gaps in your understanding of what you’re supposed to be doing and make sure you follow your doctor’s directions for medication and additional care.

How can medical management help prepare a patient for surgery?

UM nurses might call members who are having elective surgery, before they go into the hospital and after they leave. They’ll ask, ‘Are you clear on what’s going to happen with your surgery? Do you have your care lined up when you go home? Do you have someone to take care of you?’

After the surgery, the UM nurse would follow up and ask, ‘Are you clear on the doctor’s instructions? Have you gotten the tests that you were supposed to get? Do you have an appointment to see the doctor?’

Readmission rates have been reported to run from 7 percent to as high as 20 percent in the Medicare population. The key to reducing those rates is making sure members follow up with their physicians after discharge.

It’s not about saying no and denying services; it’s about helping members do the right thing.

How can employers encourage employees to take advantage of medical management?

Employers can stress the importance of engagement with the medical management staff. In the past, people have wanted to keep medical management at arm’s length. If employers can encourage employees to cooperate, it can go a long way to benefiting both the member and the plan.

Employers also should stress the value of members actively participating in medical case management, which often targets those with complicated and extensive care needs. As the case managers help build the care plan, the member is essential to its success.

Insights Health Care is brought to you by HealthLink

How to help your employees and managers better manage stress

Stress is a normal psychological and physical reaction to life’s demands, but after the demand is met, the body needs to return to its normal relaxed state. The inability to do so keeps the body on high alert, which creates stress and can lead to health problems.

“Successfully managing stress has numerous benefits — fewer health problems, increased productivity and greater job satisfaction,” says Amanda R. Budzowski, manager of Onsite Health Coaching for UPMC Health Plan. “Helping people find relief from stress is a good way to help them improve their health as well.”

Smart Business spoke with Budzowski about how mindfulness can be taught to help employees and managers better manage stress.

What is mindfulness?

Mindfulness is a mental exercise that has been shown to improve physical health. It is a form of deliberately paying attention to thoughts and sensations without making judgments. It is the practice of purposely focusing attention on the present and accepting it.

Mindfulness has generated attention in the mainstream media of late, including features on shows such as ‘60 Minutes,’ as well as in popular psychology literature. But, in fact, the practice is descended from a Buddhist concept that is more than 2,600 years old.

How can mindfulness impact stress?

Mindfulness meditation has been scientifically proven to be of benefit for physical, emotional and mental health. Practicing mindfulness can lead to decreases in stress and anxiety, improved concentration and attention, decreased anxiety, and increased self-awareness and emotional well-being. Mindfulness is related to decreased stress, which, in turn, contributes to increased positive health perceptions and health behaviors.

Some people choose different ways to practice mindfulness, such as meditation, yoga and tai chi, but mindfulness can be practiced as part of a daily routine.

For instance, walking is a good mindfulness exercise as you can be aware of the sensations of walking as you do it — the feel of the pavement, the way your body reacts to the exercise. Taking a shower is another mindful activity that enables someone to concentrate on how the water feels on his or her body. Even brushing your teeth, something you do to start and end a day, can be a good mindful exercise as you pay attention to the sensations, tastes and movements involved.

Mindfulness puts emphasis on focusing on things happening in the present moment. This does not mean ‘spacing out,’ but rather purposefully paying attention to your surroundings, your emotions, your thoughts and how your body feels.

Equally important is not judging the present moment. Judgments can cause you to dwell on past feelings or bad situations. By training your mind to focus on the present, you will not feel the stresses of regrets from the past or anxiety about the future. Controlling your mind in this way eliminates stresses.

Are there preferred mindful techniques?

It’s important to realize that there is no perfect way to practice mindfulness, nor does it need to be complicated. People need to try different techniques and choose the one that’s best for them. Here are some techniques that can help to reduce stress:

  • Deep breathing — Focus on breathing from the stomach and not the chest. Focusing on the sound and the rhythm of your breathing can have a calming effect and help you stay grounded in the moment.
  • Meditating — This may take practice, but even beginners can try to find a comfortable place, free of distractions, to quiet the mind.
  • Listening to music — Focusing on the sound and vibration of each note keeps you in the current moment and promotes relaxation.
  • Relaxed breathing — Take deep, even-paced breaths that use your diaphragm to expand your lungs. Slowing your breathing allows you to take in more oxygen and breathe more efficiently.
  • Concentrated breathing — Follow the direction of your breathing in and out and all the way through. By keeping your mind focused on your breath, you sustain awareness and cultivate concentration.

Insights Health Care is brought to you by UPMC Health Plan

How to make sure your employees’ health information stays private

The federal government has strict rules about personal health information. Insurance carriers assume much of the responsibility, but many organizations are just as responsible. The financial penalties for revealing personal health information might be surprising, so it’s important to know where you stand.

“The level of responsibility depends on how the plan is funded,” says Amber Hulme, Medical Mutual Vice President, Central and Southern Ohio. “But every organization should know how the privacy rules work, so employees can feel good about the safety of their health information.”

Smart Business spoke with Hulme about how the privacy rules help protect health information, what types of penalties organizations can face for not complying and how to make sure their employees’ health information is protected.

Which privacy laws protect health information?

The first was the Health Insurance Portability and Accountability Act (HIPAA). Congress passed HIPAA in 1996 to set standards for insurance carriers and other covered entities and make sure people’s protected health information (PHI) stays confidential. In 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act was passed to widen the scope of the privacy and security protections under HIPAA. HITECH made the covered entities more liable and increased government enforcement.

What kind of information qualifies?

A wide range of personal health information is protected by law, such as doctor’s notes, claim status, payment information and coordination of benefits. But even when information doesn’t specifically reference a person’s health condition, it can still be considered PHI.

Under HIPAA, PHI also includes information that identifies the individual and references how their care was paid for and provided. So any data that meets the right criteria is protected just as much as a full medical record. A person’s name and Social Security number can be considered PHI when it’s tied to payment for medical care.

What types of organizations does HIPAA affect?

HIPAA rules affect organizations that are fully insured through their insurance carrier, as well as those that have self-funded health plans and pay their own claims. But there are important differences in terms of actual responsibilities.

For example, the insurance carrier is considered the covered entity when the organization has a fully insured plan and does not have access to PHI. But when they are self-funded, organizations often have to handle the kind of sensitive information that is protected by HIPAA to help administer their plan. In those situations, self-funded organizations are directly liable to the government if anything goes wrong.

What are the penalties for an unauthorized disclosure?

It depends on the number of people involved and how it’s handled. If the organization is a covered entity and was unaware an incident occurred, the penalty could be as low as $100 per violation. But the amount increases significantly if it’s determined there is reasonable cause or willful neglect involved. In those cases, covered entities can face penalties of up to $50,000 per violation or more depending on the number and the nature of the violations.

How can organizations help protect health information?

Again, it depends on the health benefits’ structure. If they are fully insured and don’t directly handle this type of information, it’s just important to ensure they have a good relationship with their insurance carrier and understand policies and procedures for handling PHI.

Self-funded organizations often do handle PHI, so they need to be vigilant. They should only allow employees to access certain information if they need it to do their jobs. It’s also important to know how soon their plan administrator will tell them if a breach occurs so they can send the required notices. This should all be outlined in their business associate agreement, but it’s a good idea to check if they aren’t sure.

Insights Health Care is brought to you by Medical Mutual

Eligibility audits are not just about who belongs in your benefits plan

A dependent eligibility audit is a critical evaluation of an employer’s health plan to verify that all enrolled dependents meet the eligibility requirements set forth under the plan.

The audit process requires each enrolled dependent’s eligibility be substantiated, and those that fail to meet the eligibility requirements may be removed from the plan.

The primary benefit of an audit to an employer is twofold.

“First, the employer will be in a better position to control costs by eliminating claims paid for ineligible dependents,” says Ron Filice, president and CEO at Filice Insurance. “However, just as beneficial from a compliance standpoint is the important advantage of ensuring that the terms of the plan are strictly adhered to by enrolling only dependents who meet the plan’s requirements for eligibility.”

Smart Business spoke with Filice about the dependent eligibility audit process.

Where does an employer start?

The first step in undertaking a dependent eligibility audit requires a careful review of plan documents, including the Summary Plan Description, and any enrollment materials. These documents set forth the definition of an eligible dependent.

While federal law provides basic guidelines as to who must be included as a dependent, employers often go beyond those basic guidelines and set a more inclusive definition. This definition may appear straightforward, but it is imperative that an employer fully understand who is included and who is excluded as a dependent.

An employer may discover that the plan sets forth an undesirable definition of dependents that encompasses far more enrollees than intended. In this case, an employer cannot retroactively alter the definition or begin an audit using the desired definition.

Instead, the definition of a dependent should be redrafted for the start of a new plan year and the benefit of an eligibility audit may need to be reconsidered.

What does the process entail?

An employer may wish to undertake a comprehensive audit that will require specific documentation to verify dependent eligibility and that will impose removal of any dependent found to be ineligible.

In this case, an employer will be best served by contracting with a qualified third party to conduct the audit.

Alternatively, an audit may be a bit more lax by requesting that employees certify by signing an affidavit that their enrolled dependents meet the eligibility rules under the plan. Employees would have the opportunity to voluntarily remove any dependents who do not qualify.

This method will likely not yield the dramatic results that a more comprehensive audit will, but it may be a better fit for the company culture and for employee morale.

What kind of documentation may an employer request?

The most straightforward manner of verifying dependent eligibility is to require employees to provide documentation to substantiate eligible status.

Marriage and birth certificates are adequate and are often readily obtainable by the employee. Additionally, a current lease, mortgage, or billing statement may properly demonstrate the residence of a dependent.

Just as important, though, is how the employer will handle a situation where the employee is unable to obtain and produce appropriate documentation. The employer should be proactive and plan ahead for such scenarios, and should apply the same strategy each time the situation arises.

What are some other important considerations?

Employers need to diligently plan the process, including whether and to what extent a third party will be involved, how the process will be communicated to employees, the time frame by which the audit will need to be completed, the action to take with respect to ineligible dependents and how the audit process will affect the workplace environment.

Finally, audits implicate various aspects of federal benefit laws. For this reason, employers should always consult with competent counsel prior to undertaking an audit to ensure that the employer will be able to navigate legal issues and remain in compliance. ●

Insights Health Care is brought to you by Filice Insurance

Value-based insurance: Don’t let your consumer-driven health plan be a barrier to necessary care

Consumer-driven health plans (CDHPs) have been increasing in popularity because they appear to be custom-made for this era of health insurance reform. The growth makes sense for a number of reasons. Most of the reasons are related to reduced medical costs and increased engagement by members, including a greater interest in and knowledge of costs and quality of care.

“There is, however, evidence to show that with CDHPs, essential medical services often will be curtailed if individuals have to pay an increasing amount of their own money,” says John Mills, senior director of Consumer Products at UPMC Health Plan. “What is needed is a value-based insurance design element to those plans that would deliver highly valued services at little or no out-of-pocket costs.”

Smart Business spoke with Mills about the concept of value-based insurance designs and how they can interact with CDHPs to make sense for consumers and companies.

What is value-based insurance design?

Value-based insurance design encourages consumers to use high-value drugs and health care services by reducing or eliminating cost sharing for those treatments. This is also known as evidence-based benefit design because the services and treatments have been proven, through extensive research, to be effective.

The plans provide a high level of clinical benefit for the money spent. According to a 2008 study by the American Journal of Managed Care, 20 to 30 percent of large employers implement some form of value-based insurance design.

How do value-driven plans work?

These insurance plans seek to increase health care quality and decrease costs by using financial incentives to promote more cost-efficient health care services and increase consumer choice. Health benefit plans can be designed to include coverage for evidence-based care and services that are shown to reduce costs and improve health.

For example, when a plan covers what is considered preventive care — wellness visits, blood pressure treatments, diabetes medications, etc. — at low or no cost, it can result in savings down the road by avoiding more costly treatments. A benefit plan can also include disincentives for unnecessary or repetitive health choices, or for procedures that produce a positive outcome that could have been produced for a lesser cost.

How can value-based insurance improve CDHPs?

Studies have shown that value-based design improves access to health care services while helping patients adhere to prescribed medical treatments. But research has also shown that when CDHPs require a financial penalty for medical treatment, consumers tend not to make the long-term health care decisions that are necessary to improve care and that, in some sense, CDHPs can create barriers to necessary care.

That’s where a value-based design comes into play. If structured correctly, such plans encourage the use of high-value drugs and health care services by reducing or eliminating cost sharing for those treatments.

What constitutes value-based design?

Value-based insurance design has grown out of the evidence that even modest co-payments can discourage use of a drug or service and that those who have high cost-sharing are less likely to follow treatment regimens prescribed by their doctors. With a lowering (or elimination) of out-of-pocket costs, value-based insurance enables consumers to afford the care they need. This can lead to improved health outcomes.

A 2014 study by the University of Michigan Center for Value-Based Insurance Design found that millions of Americans could benefit from expanded coverage of CDHPs that incorporated value-based insurance design principles in order to better meet the needs of chronically ill persons and those at high risk for developing chronic conditions.

Enrollment in CDHPs has grown from 11.4 million to 15.5 million in 2013, according to America’s Health Insurance Plans, a trade organization. The Affordable Care Act emphasizes increased quality and efficiency in health care through access to preventive services and providing appropriate treatment. Value-based insurance design fits right into that.

Insights Health Care is brought to you by UPMC Health Plan

Integrating pharmacy with medical benefits can help your bottom line

Managing the rising cost of prescription drugs is no easy task for any organization. According to research from Buck Consultants in 2014, employer-sponsored plans spent about 18 percent of their annual health care budget on pharmacy benefits. The trend is leaving many organizations looking for options.

“Prescription drug costs have increased dramatically over the last several years and organizations are feeling pressure to adjust their benefit designs,” says Veronica Hawkins, Medical Mutual Vice President, Government Accounts. “As a result, more organizations are integrating their medical and pharmacy benefits to have a more coordinated approach.”

Smart Business spoke with Hawkins about some of the recent trends in prescription drug costs, what it means to integrate benefits and how doing so could lower overall medical costs and promote better health for employees.

How do prescription drugs factor into rising health care costs?

There are just so many options on the market today. It causes confusion about what people really need. Beyond brand name and generic drugs, there are specialty drugs that are often used to treat rare or complex diseases.

Specialty drugs are usually the most expensive option. According to some reports, they represent about 20 percent of prescription drug spending for organizations that offer pharmacy benefits. This figure is understated, however, because it does not include the growing volume of specialty drugs administered through providers’ offices and outpatient facilities.

Experts predict specialty drug use will increase to 45 percent of all pharmaceutical sales by 2017. That’s why it’s so important for organizations to have the tools to manage these costs.

How can organizations structure their pharmacy benefits?

Organizations typically have two options to provide pharmacy benefits to their employees. Most insurance carriers are contracted with a pharmacy benefit manager (PBM). Organizations can go through their insurance carrier to build pharmacy benefits into their medical plan, or create a direct relationship with any PBM they choose.

Each organization’s involvement is different. Some choose to separate the pharmacy benefit from their medical coverage and work directly with a PBM. They believe it will save them money. This approach can, however, lead to higher costs and misaligned care management policies for the members. With integrated pharmacy and medical claims, organizations work with their health insurance carrier to manage medical and prescription drug utilization and costs in one cohesive package.

What are the advantages of integrated benefits?

From the convenience standpoint, having integrated benefits makes it easier for many organizations to manage their health plan. They only have to work with one vendor, so there is less administrative responsibility. Employees have one ID card and a single online portal to access their health benefits. But it goes beyond convenience. Integration gives organizations the tools they need to take a holistic, coordinated approach to managing the health of their employees.

It also allows insurance carriers to maintain a uniform strategy for managing the physician, hospital and pharmacy needs of its members. Medical Mutual, for example, has programs to manage drug use and costs through medical benefits the same way it does through the pharmacy benefit. These programs make sure members meet specific criteria before receiving costly medications.

What else should organizations consider?

In the past, prescription drug costs didn’t count toward the same out-of-pocket limit as medical costs. That changed for many organizations in 2015. In those cases, employees can use both expenses to reach their limit and have their plan start paying at 100 percent. That may affect how some organizations choose to structure their pharmacy benefits.

In addition, it’s important to realize that the ‘cross accumulation’ of expenses doesn’t happen automatically. Integrating pharmacy and medical benefits into one coordinated approach makes the administration much easier and, in many cases, can reduce costs.

Insights Health Care is brought to you by Medical Mutual

Improve the health of your employees with preventive health reminders

Are you and your employees taking all the right preventive steps to wellness? Unfortunately, you may not realize what you’re missing or how screenings can impact your overall health plan.

As an example, many problems identified at annual health screenings are chronic diseases, such as diabetes and cancer.

According to the U.S. Centers for Disease Control and Prevention, 75 percent of medical spending dollars in the nation go toward chronic disease management. In 2010 alone, cancer cost $157 billion, while heart disease and stroke cost $315.4 billion. In 2012, diagnosed cases of diabetes cost $245 billion, including $69 billion in lost productivity.

Although your health plan may not pay for all of the recommended services and treatments, adopting at least some can help lower your benefit costs.

Smart Business spoke with Toni Collingwood, account manager II at HealthLink, about some preventive health screenings.

What screenings should children be getting?

  • Infants who leave the hospital less than 48 hours after birth need to be seen by a doctor within two to four days. The baby may get vaccines or added screenings for tuberculin or sickle cell anemia, if appropriate.
  • A baby’s blood count should be checked once between nine and 12 months.
  • Lead testing performed at 12 and 24 months, unless you’re sure the child hasn’t been around lead.
  • Babies can be tested for autism at 18 and 24 months.
  • From age 2 to 10, children should have an annual check for height, weight, body mass index (BMI), development and behavior, vision and hearing. Screenings for tuberculin and urine testing can be administered, if appropriate.
  • Starting at age 3, oral and dental health needs to be added and blood pressure should be checked.
  • From ages 11 to 18, annual checkups remain similar.

With adult women, what are some key screenings?

  • Annual screenings should check height, weight, BMI and blood pressure.
  • Cholesterol should be checked every five years starting at age 20, with more screenings as necessary.
  • A breast exam should be conducted every one to three years until age 40, when an annual doctor’s exam needs to be supplemented with a mammogram.
  • For cervical cancer, women should be checked every three years from ages 21-29 and every five years have a Pap test plus HPV test from ages 30 to 65. If the last three Pap tests where normal within the previous 10 years, women can stop screening for cervical cancer at age 65.
  • Sexually active women ages 25 and younger need to be screened for chlamydia.
  • Colorectal cancer and osteoporosis can start to be tested for around age 50.
  • Women born between 1945 and 1965 need to be screened once for Hepatitis C.
  • Pregnant women should see their doctor of OB/GYN in their first three months. Some tests or screenings that could be administered during the pregnancy include diabetes during pregnancy, blood count, Hepatitis B, HIV, Rubella immunity, Rh(D) blood type and antibody testing, syphilis, urinalysis, amniocentesis, chorionic villus sampling, special blood tests and ultrasound tests. Pregnant women should be vaccinated with Tdap vaccine, as well as possibly an inactivated flu vaccine.

What are some important screenings for adult males?

  • Annual screenings should check height, weight, BMI and blood pressure.
  • Cholesterol should be checked every five years starting at age 20, with more screenings as necessary.
  • Colorectal cancer and prostate cancer can start to be tested for around age 50.
  • Men born between 1945 and 1965 need to be screened once for Hepatitis C.
  • Those ages 65 to 75 who have ever smoked should be checked once for abdominal aortic aneurysm.

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