Transitions in care: How to better ensure patients navigate the health system safely

Transitions in care are the most critical component in preventing quality and safety issues in health care. Whether a patient is moving around a hospital, transitioning from one type of care to another like going from a hospital to nursing home, or heading home under self-care — this internal or external hand-off is the time when more mistakes are made.

Orders might not be communicated properly. Patients might not receive the right medication or dosage. There can be a lack of treatment or delay in care.

Both the government and regulatory agencies have put improving transitions in care high on their radar screen, says Diane Nichols, manager II of Case Management & Support Services in HealthLink’s Medical Management.

“It’s important that we have processes in place so we’re all speaking the same language and have the same understanding of what’s happening with a patient and what we need to do to help them improve their health,” Nichols says.

Smart Business spoke with Nichols about the role case managers have to ensure health plan members are transitioned properly.

What is case management and how does it improve care?

Whether they are self-insured or fully insured, employers have the option of purchasing case and/or disease management. The case managers are advocates for the members, managing patients that have significant conditions or multiple, complex conditions that show instability.

Case managers act as an advocate and educator for patients to ensure they are getting all of the treatment they’re enabled to receive under their benefits. The case managers coordinate care by working with all of the different providers, such as hospital case managers, physicians, specialists, etc., to make sure care is being provided correctly and everyone is on the same page.

They can make sure patients — or their families — understand discharge orders, set up follow-up appointments and have a way to pick up new medications. Case managers also help with medication reconciliation — creating an accurate list of all medications a patient is taking, which is one of the biggest problems with transitions in care.

Not only does this kind of care coordination improve outcomes, it also keeps costs in check because patients are able to get better quicker, and back to work sooner.

For example, a patient was supposed to have a dressing changed, but the home care agency scheduled to take care of it never showed up. This can cause a wound to become infected, which requires additional medication, and the person could end up being readmitted to the hospital. In this instance, the case manager intervened, preventing the care disruption and unnecessary complications from occurring.

Every time your recovery from an illness is disrupted and you become sicker and debilitated — especially when it’s related to a medical error due to poor patient handoff — not only is it possible that you are ill longer but it also impacts your quality of life, and your ability to work and pay the bills.

How does case management work when switching from one health plan to another?

Most insurers have a continuity of care policy, which is related to the transition of care. If a health plan group is switching networks, the case manager can help ensure there’s continuity of care for significant treatments.

If a woman is in her third trimester of pregnancy, she’ll be able to continue with her current doctor. If an employee receives chemotherapy or has a chronic disease like diabetes, then the case managers would work with him or her over a period of months to transition over to the new network with no negative effects.

Is there anything else employers can do to improve transitions in care, beside signing up for case or disease management?

Employers can help with ongoing communication to ensure their employees or union members are utilizing these services.

A lot of patients have great experiences navigating the complexity of the health care system with the help of their case manager. The employee can even take that feedback and share it with the health plan’s members.

In today’s health care environment when employers and members face increased costs, it’s more important than ever to ensure members don’t fall through the cracks of their prescribed treatment and prolong recovery time.

Insights Health Care is brought to you by HealthLink

How a more attractive benefits package can help recruit and retain employees

Employers have found that a good health benefits package is essential to recruit and retain the best and brightest employees. A Harvard Business Review survey of human resources professionals showed 60 percent of them believe health benefits are more important than base salary in recruiting.

“Many employers are finding out the best way to make sure they have a highly motivated and satisfied workforce is through a solid health benefits package,” says Amber Hulme, Medical Mutual Vice President, Central and Southern Ohio. “Employers now have many creative options to ensure they can still offer benefits in an era of rising health care costs.”

Smart Business spoke with Hulme about why health benefits are so important to employers and employees, and how employers can mitigate the cost of providing their employees with excellent benefits.

How does a strong employee health benefit plan attract and retain good employees?

Today’s job market, particularly in Central and Southern Ohio, is very competitive. Employers want to find and hire the most skilled and motivated employees. Many surveys show the top two employee-valued benefits are health care and retirement funds, with health benefits often the most important.

With the costs of health care increasing, many job seekers look for those companies that provide health benefits. Additionally, other surveys clearly show the majority of a company’s existing employees say they would leave if their employer no longer offered health benefits. Health benefits today are an essential part of business strategy.

How can employers manage the cost of providing health benefits?

Employers can maintain and sometimes lower monthly health insurance premiums by increasing employee out-of-pocket costs. One way to do this is through a high-deductible health plan. These are plans with lower premiums and higher deductibles than a traditional health plan.

When coupled with a health savings account, a high-deductible health plan covers some costs upfront and then employees pay for other medical expenses using money that has been set aside before taxes. This encourages employees to manage and keep track of their own health care and take responsibility for how they spend those dollars.

Besides lowering the monthly premium for both employers and employees, high-deductible health plans empower employees to control their own costs.

Why is it important for employees to be responsible for their health care costs?

The idea is to make health care more consumer-driven. When employees have a greater financial stake in their own health care, they learn how to choose the most efficient doctors and hospitals in terms of cost and quality.

How do online tools help?

Online tools provide transparency in cost and quality, which are essential in giving health care consumers the information they need to make informed care decisions.

For example, Medical Mutual has an online tool called My Care Compare, which helps members find the best price, provider and location for health care services. With this tool, members can check cost estimates for more than 170 types of health care procedures and tests. Also, they are able to review satisfaction scores for physicians and quality ratings for health care facilities in their area.

Why does it make sense for organizations to invest in the health and well-being of their employees?

Wellness programs provide health information and engagement to help employees achieve healthy living goals. The programs also help employees understand their health, identify risk factors for disease and make positive changes. Wellness programs are good business, too, because they can help employers control health care costs, raise morale, improve productivity and reduce absenteeism.

Insights Health Care is brought to you by Medical Mutual

How to make sense of tax-free financial accounts for your health benefits

Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) are three of a number of tax-advantaged financial accounts that employers can make available to employees looking for health benefit options in what can be a confusing marketplace.

“To pay for their medical expenses, employees have a number of tax-free options that they can explore,” said Ryan C. Wasileski, director of Ancillary & Specialty Product Administration for UPMC Health Plan. “The differences between them often are the kinds of insurance plans they work with, who owns the account, who controls the account and who can put money into it.”

Smart Business spoke with Wasileski about HSAs, HRAs and FSAs, and how they can make sense for employers and employees.

What exactly is an HSA?

An HSA is similar to a 401(k) retirement account, except that the money goes for medical expenses. HSAs, only available through HSA-compatible insurance plans, combine a high-deductible health insurance plan with a tax-advantaged savings account.

Employees own the account and money can be deducted from their paycheck, pretax, and deposited into their HSA. Employee contributions, interest earned and dollars spent on qualified health care expenses are all tax-free. Employers may contribute to HSAs, and employees also can invest, once they reach a certain level of savings.

HSAs do not limit when money has to be used by, therefore employees have the freedom to build their balance up for future medical expenses, invest in a variety of mutual funds or use for current out-of-pocket medical expenses. Employees who leave their job can keep their HSA.

What is an FSA?

With an FSA, the employer sets up the account and owns it, but employees get to decide the qualified medical expenses they choose to pay for. It’s considered ‘flexible’ because of its compatibility to be offered with just about any employer-sponsored health plan.

Similar to HSAs, employees and employers can make tax-free contributions to the account. FSA money cannot be invested, however, and must generally be used before the end of the plan year.

The IRS guidance issued in 2013 began allowing Health FSAs to carry over unused balances of up to $500 remaining at the end of a plan year, to be used for qualified medical expenses incurred in subsequent plan years. Carryovers are optional and make a good alternative to the grace period.

Employees who leave their employer generally lose their FSA coverage.

How do HRAs differ from HSAs and FSAs?

A HRA is a benefit that is set up by the employer for employees or retirees. It is a fund that pays for medical expenses that are not covered by a health plan. These could include deductibles, coinsurance or both.

The employer owns the HRA fund and can decide which expenses will be covered. For the employer, any money that is given to an employee for use as a medical expense is tax deductible. In addition, employees do not need to pay taxes on money received from an HRA if used for qualified medical expenses. The employer has the option to allow a rollover of HRA funds from plan year to plan year.

What do employers like about FSAs, HSAs and HRAs?

Many employers are attracted to high-deductible plans combined with account-based plans because it gives the employee more control of their health care by having them assume a more active role. They have a financial stake in lowering their costs.

The term consumer-driven health plan often describes the increased responsibility of employees or consumers. Increased financial responsibility increases consumer awareness and market competition, and ultimately leads to greater health care quality and availability to lower costs.

A well-designed consumer-driven health care plan will include a high-deductible health plan, account-based plan and wellness and disease management programs. Studies show consumers in these plans have increased consumption of preventive care services, healthy behaviors, care engagement and lower cost than other types of plans — even for patients who are high users with chronic medical conditions.

Insights Health Care is brought to you by UPMC Health Plan

How to comply with new IRS reporting requirements

Starting next year, as part of health care reform, the IRS will require anyone who has health insurance to provide the Social Security numbers of any dependents covered on their plan. As a result, insurance companies and many employers have been tasked with collecting that information.

“Typically, insurance carriers only require employees’ Social Security numbers, not those of spouses or dependent children,” says Veronica Hawkins, Medical Mutual Vice President, Government Accounts. “However, the IRS will need that information to verify that everyone in the U.S. is covered.”

Smart Business spoke with Hawkins about what the IRS reporting requirements involve, how employers can make sure they comply with the new rules, and how to help their employees avoid costly fines for not supplying the required information in a timely manner.

What are the new reporting requirements?

As part of the Affordable Care Act (ACA), the IRS added Sections 6055 and 6056 to the Internal Revenue Code. In early 2016, employers or their insurance carrier will need to collect and report a wide range of employee information to the IRS. That includes Social Security numbers for dependents of all covered employees.

The purpose is to help the federal government enforce the ACA provision that says everyone in the U.S. has to have health insurance — or qualify for an exemption. In addition, it makes sure certain employers can prove they provide ‘minimum essential coverage’ for their employees and dependents.

What do organizations have to do?

It depends. The funding structure of the organization’s health plan — whether it’s fully insured or self-funded — is the first thing to consider. Self-funded employers, which pay their own claims, are responsible for reporting everything to the IRS.

The next thing to consider is pay or play. Pay or play is a rule under the ACA that applies to employers with 50 or more full-time employees, including equivalents. When the rule applies, there are reporting requirements for both employers and their carrier. When it doesn’t, employers can rely on their insurance carrier to handle everything if they are fully insured.

However, it’s important to know that insurance companies are required by law to reach out directly to any fully insured members who are missing Social Security numbers. So it’s in the employer’s best interest to work with the carrier ahead of time.

Are there penalties involved?

Self-funded employers are subject to penalties for not submitting forms correctly. The penalties range from $100 to $250 per instance, depending on whether the IRS believes a mistake or omission was intentional. However, for 2016, the IRS has said it will not penalize those employers if they can show they made a ‘good faith effort’ to comply with the rules.

Again, fully insured employers are different. The penalties are limited because the requirements can fall on them or their insurance company. But regardless of funding, there can be consequences for employees as well, if the IRS is missing a Social Security number for them or a dependent.

Instead of a fine, those employees could see money come out of their next year’s tax return. The actual amount would vary based on the type of information that’s missing, and the year in which the violation took place.

How can organizations prepare?

There are a few things organizations should do. Those with fully insured plans should work with their insurance carrier and prepare to file their own pay-or-play reporting. Medical Mutual, for example, is reaching out to employers to collect information and minimize impact on employees.

Organizations with self-funded plans should be familiarizing themselves with the IRS forms and instructions. They need to understand what information they are missing and make sure it’s collected and submitted correctly.

It may also be a good idea to consult with a tax adviser or legal counsel.

Insights Health Care is brought to you by Medical Mutual

How a private exchange can balance health care products with cost

The Affordable Care Act is probably best known for its Federal Marketplace, or exchange, but as the law evolved it has helped increase the popularity of another product: private exchanges.

Private exchanges are increasingly seen as a viable business option because they offer employers predictable cost control through defined contribution, while also empowering employees to become smarter consumers.

“Private exchanges are increasing in popularity because they may offer a strong balance of product and cost choices, decision support that empowers employees to become health care consumers, and administrative and financial benefits to employers,” says Kismet Toksu, president of EBenefits Solutions, a subsidiary of UPMC.

Smart Business spoke with Toksu about why private exchanges can make good business sense for employers.

What are some of the differences between private and public exchanges?

Either the federal or state government sponsors a public exchange. An employer, broker or association may sponsor a private exchange. While public exchanges serve individuals or small employer groups of up to 50 lives, private exchanges, typically, serve the employer group market. Private exchanges also vary on the size of companies they target. Due to rules that govern public exchanges, the products offered are more limited than those available on private exchanges. Another big difference relates to customer experience and service.

What are some of the advantages of a private exchange over a public exchange?

One is an increase in options, both in terms of benefits that may be offered and companies that offer products.

With a public exchange plan, members may choose coverage for medical expenses and prescription drugs only. Private exchanges may offer more than medical and prescription plans, such as dental and vision coverage, disability, accident or critical illness. Even non-medical plan options may be offered. Private exchange plan options have fewer limitations and may be more customized.

In addition, there is more cost certainty for employers, who are often responsible for paying the largest portion of the coverage. This type of funding is called defined contribution. Employees may use the defined contribution to offset costs of the products they select.

How can an employer benefit from going to a private exchange?

First, an employer may continue to reap tax benefits by providing employees access to health insurance. An employer also may retain control over their benefit offering. When employees understand the true cost of their options, they tend to be more cost-effective, which is an advantage for both the employer and employee.
A private exchange may reduce the administrative burdens while maintaining employee loyalty associated with offering coverage.

How do employees benefit from private exchanges?

On a private exchange employees have the opportunity to select a plan that best fits his or her needs and budget. Private exchanges provide decision support not often available elsewhere. Employees may also find that private exchanges provide better customer service.

Is there a set amount that an employer must contribute to a private exchange?

The amount an employer contributes is determined entirely by the employer. With a defined contribution plan, the employer gives the employee a set amount for health care and the employee increases that, as he or she sees fit. A defined contribution can cover the entirety of an employee’s plan, or only a portion of the total cost.

What else do you need to know about private exchanges?

Remember that no two private exchanges are the same. Some offer individual plans; some offer group plans targeting specific group sizes. The types of benefits offered — such as dental, vision or disability — may vary, depending on the exchange. Certainly the member experience and quality of support varies. Also, private exchanges are only available to employees of companies that choose to participate in it.

Insights Health Care is brought to you by UPMC Health Plan

Self-funded health plans provide customization, control and cost savings

Traditionally, self-funding was a better fit for privately owned companies with more than 100 employees and a tolerance for risk. That’s changed.

With the Affordable Care Act (ACA) and its mandates for benefits and essential coverage, third-party administrators (TPAs) and stop-loss carriers have created solutions geared toward the smaller market segment.

And while smaller employer groups are aware of the concept, many haven’t looked into how it’s relevant to their population until the ACA’s transitional relief ran out.

“Over the past month, the fully insured carriers have rolled out the 12/1 renewals to the 51 to 99 employee market segment, so we’ve seen a drastic increase in quote volume because they now have figures in front of them of what a fully insured option would look like,” says Abbe Mitze, account executive II at HealthLink.

Mitze says with the self-insured market, you can use health as a determining factor, which isn’t the case for many fully insured plans under the ACA.

Smart Business spoke with Mitze about the benefits of self-funded health plans that are appealing to more employer groups.

Is lower cost the biggest reason for employers switching to a self-funded plan?

Yes. The No. 1 factor for an employer group to select a solution — whether fully insured or self-funded — is cost. After health premium, the next most important factor is the network of doctors and hospitals.

Since self-funded plans aren’t subject to certain ACA taxes and mandates in regards to benefit coverage, in general the premium is lower in a self-funded solution.

Also, the healthier your population, the better chance you’ll reap greater rewards by moving to a self-funded solution.

How does self-funding enable more flexibility?

You can customize from both a network or plan design perspective.

In a self-funded solution, you pick the best vendors in the market for your plan. With the help of your insurance adviser and TPA, employers choose a pharmacy benefit manager, disease management coordinator, organ transplant writer, etc., who deliver the most cost contained care that is the best fit for the employee population. However, with fully insured plans, the model is turnkey; there’s no flexibility to customize.

Although all plan designs are subject to some ACA mandates, self-funded employers have the ability to keep traditional plan designs, like two times deductibles and a three-tier pharmacy option. Many fully insured carriers have moved to three times deductibles and a six-tier pharmacy program. In a self-funded solution, you can make that decision for yourself.

What control does self-funding provide?

It’s all about transparency. You have full access to all claims information; you know where your health care dollars are being spent and who is utilizing the plan. Using this data, you can make educated decisions on your benefit design, your employee offerings and how to proactively steer spending.

These reports are why you need a very consultative insurance adviser who can guide you, as part of a self-funded solution.

Why do some companies hesitate to go self-funded? What do you tell them?

The risk is an obstacle for many. However, even in a self-funded solution, you have stop-loss insurance, so your risk corridor is outlined. You know ahead of time what is the worst-case scenario or maximum exposure. You can put together the type of contract and stop-loss attachment point where you’re comfortable with the risk.

Another concern is that when you go self-funded, you will be declined from fully insured plans in the future. This risk has decreased significantly because health is no longer a determining factor in underwriting for more and more plans. Starting in 2016, this includes employer groups that fall into the 99 and lower market segment.

Also, keep in mind that a level-funded or partially self-funded plan can bridge into self-funding. These plans look and act like a fully insured plan, where employers pay a flat monthly premium. But if there is excess money, employers potentially get a payout after their plan-year ends.

If you aren’t already exploring the advantages of self-funding for your health plan, it’s time to start.

Insights Health Care is brought to you by HealthLink

How to help employees with chronic health conditions

Living with a chronic condition is a reality for many Americans. estimates that more than 125 million Americans live with at least one chronic illness. It is predicted that by 2020 that figure will rise to 157 million Americans.

The National Center for Health Statistics defines a chronic disease as any illness that lasts three or more months. The most common chronic conditions include heart disease, diabetes, kidney disease, autoimmune disorders, lung disease and multiple sclerosis.

For many, living with a chronic condition means living as much of a “normal life” as possible, and that would include being part of a workforce.

“Living with a chronic illness is especially difficult for persons who need to work every day,” says Debi Vieceli, RN, a cardiac care manager for UPMC Health Plan. “Employers need to know how they can help employees as much as possible to lead normal, productive work lives.”

Smart Business spoke with Vieceli about ways that employers can help their employees with chronic health conditions.

How should an employer assist an employee who has a chronic condition?

First, you need to recognize the fact that a chronic illness can disrupt a person’s life. It can affect a person’s appearance, their physical abilities and independence. The employee might be tired quite often and in pain.

Among the things an employer can do is to encourage employees with chronic conditions to seek out support groups, where they can share experiences and learn about coping mechanisms. If possible, an employer could enable such a group to be established in the workplace, or facilitate communication between employees who live with chronic conditions.

How do chronic illnesses affect your health care costs?

Seventy-five percent of health care costs are driven by lifestyle-related chronic illnesses. That’s why it’s so important to use case management, wellness programs, and health and productivity solutions to manage these employees and their related health care claims.

What kind of advice can an employer give to employees with a chronic condition?

It’s essential that persons with chronic conditions be personally involved in their own treatment.

Becoming an active participant in your treatment is one way to decrease the stress of the situation. Exploring treatment options and developing relationships with caregivers is also a positive step for a person with a chronic condition.

Following a healthy diet is important because good nutrition can result in better health. Those with chronic conditions should follow all special dietary instructions and be aware of the food decisions they make on a daily basis.

Are there tips that make sense for a person with a chronic condition?

For everyone, exercise is important, but that is especially true for persons living with chronic conditions. Walking or working out at a gym is good for the whole body and being able to do this can help you to feel better about yourself.

Remember, before starting any exercise program, talk to your doctor about what works best for you and what would help you develop a proper level of fitness.

Because people with chronic conditions are usually on a medication regimen, it’s always good to develop some sort of reminder system. This will enable people to be sure they are taking the right medications and at the right time.

Nothing is more important to a person with a chronic condition than making healthy choices. To prevent the exacerbation of existing chronic conditions, you need to stop smoking, eat a healthy diet and get regular exercise.

Insights Health Care is brought to you by UPMC Health Plan

How to help employees get the most out of their health benefits

When employees understand their health costs, it can save your organization money. Studies suggest, however, that most consumers with health coverage don’t fully understand their health plans.

“Employees need to understand what their insurance plan covers and what it doesn’t,” says Amber Hulme, Medical Mutual Vice President, Central and Southern Ohio. “With the right information, they can reduce health care costs for themselves, as well as their employer.”

Smart Business spoke with Hulme about what employees must understand about their health care coverage, how common misconceptions can affect medical costs and what simple steps can make the most difference.

What resources can help employees better understand their benefits?

There are two key documents your employees should know. First, all employees get a benefit book or certificate of coverage, which explain what medical services are covered — and not covered — under the plan. Employees should look up every service or supply that might apply to their needs. It’s important for employees to be familiar with this document so they aren’t surprised if a particular service is not covered.

The second document is called an Explanation of Benefits (EOB). After employees receive services, they should read their EOB to make sure they understand what they’re paying for. Organizations can encourage employees to call their insurance company’s customer service department with questions.

Why is checking the network so important?

Doctors and hospitals work with insurance carriers to negotiate rates, which is a big factor in how much members have to pay for care. Employees receiving services outside the network often have to pay any balance beyond what the insurance carrier pays. But by staying in network, they only pay their copay and any deductible or coinsurance that applies.

Many people don’t realize, however, that a provider’s network status can change. Health insurance members can make sure their doctor is in network by calling a customer hotline or going online and searching an easy-to-use provider directory.

What should employees know about their options for care?

First, employees need to know their options in non-emergency situations. When employees get injured or feel ill, their first instinct is often to visit the emergency room. But it’s not always the best choice. When it’s not an emergency, a visit to a primary care doctor could cost half as much as a trip to the ER — or less.

Urgent care facilities and convenience clinics are also great options for common illnesses such as a cold or flu, as well as infections, allergic reactions, minor cuts, burns and sprained muscles. Employees can get prescriptions filled and vaccinations.

Another important consideration is when employees need to get a blood test or have other lab work done. In many cases, they will automatically go to the lab that’s inside the hospital or affiliated with their doctor’s office. But there are options. Independent labs, for example, can often provide the same tests and the same level of service at a lower cost. Your insurance carrier should have tools that can help employees find other options that may be better for them and help them save money.

How can you effectively present benefits to your employees?

Communicating benefits clearly to employees is crucial in their understanding of health coverage. Benefit presentations are one of the best ways to educate employees.

To maximize interest, organizations need to make their presentations interactive and use visuals. Be open to any questions and present information in short segments to avoid confusion. After the presentation, refresh the topic by regularly emailing your employees with benefit reminders and updates.

The key is to give employees the resources they need — how to reach their insurance carrier, useful websites and where to look for their certificate of coverage or EOB.

Be open to communication and always encourage employees to ask questions.

Insights Health Care is brought to you by Medical Mutual

How to satisfy ACA guidelines without breaking the bank on your health plan

Certain employers don’t offer health coverage for their personnel because they can’t afford traditional employee benefits, whether it’s self-funded or fully insured.

At the same time, under the Affordable Care Act (ACA), many of those same employees work on average more than 30 hours per week and are considered full-time employees that companies need to offer benefits to — or face the employer mandate penalties.

In order to help fill this gap, third-party administrators (TPAs) and stop-loss carriers rolled out minimum essential coverage (MEC) and minimum value plans (MVP), says Abbe Mitze, account executive II at HealthLink.

“It’s an employer solution for satisfying the guidelines for not having the fines or excise tax imposed, a $2,000 or $3,000 penalty,” Mitze says.

Smart Business spoke with Mitze about MEC and MVP plans and the solutions they provide.

What exactly are MEC and MVP plans?

MEC only includes preventive care and wellness benefits. Applicable large employers can offer self-funded, low-cost MEC plans in order to avoid the $2,000 penalty. This penalty requires these large employers to provide group health insurance to ‘enough’ — a certain percentage of the total — of its full-time employees and dependents.

MVPs refer to the need to have a comprehensive health insurance plan with at least 60 percent actuarial value. In other words, the plan needs to pay at least 60 percent of the costs of claims submitted. These plans help employers avoid the $3,000 penalty for each employee who buys insurance through the government exchange.

Which companies would be a good fit for these types of plans?

Typical clients that would be in the market for this would be restaurants, hair salons, nursing homes, large car dealerships, etc. Basically, organizations that have low-paid employees who are borderline full time/part time could benefit.

For example, a company that rents out security officers to different organizations might have previously had a health plan carve-out that covered managers only and not their other 1,200 employees, who are now considered full time under the ACA. If they can’t afford a traditional employee benefit plan or to pay the penalties and fines, a MEC or MVP would be a good option.

Have MEC and MVPs been around long? What has been their history?

These plans were first rolled out in 2013. Most of them didn’t include hospital coverage because it wasn’t listed as an essential covered item.

However, last November, the government said that these plans needed to provide essential hospitalization coverage, but didn’t define what this actually looks like.

The TPAs and stop-loss carriers added hospitalization coverage — which isn’t as comprehensive as the traditional coverage in other health plans — and put these solutions back on the market.

This is important timing because the number of organizations that will be subject to the employer mandate, and more importantly the penalties and fines, is increasing in 2016.

If employers want to explore the possibility of getting MEC and MVPs, what else do they need to know?

You want to have a reputable broker that can educate you because it’s a new frontier. The plan requirements have already changed once, so you need someone who can stay on top of this, in case the government makes additional changes.

In addition, it’s important to make sure you’re looking for a standard plan, where all components of the benefit design fit into the actuarial calculator. MEC and MVPs come as both standard and nonstandard plans, but a certifiable standard plan is one that will hold up against the IRS and its fines.

Again, that’s why it’s important to consult with experts who can help you navigate through new territory.

Insights Health Care is brought to you by HealthLink

How to weigh the pros and cons of self-funded vs. fully insured health plans

For companies that must deal with how best to handle health insurance costs, there’s a decision that needs to be made fairly early in the process. Should a company choose to be fully insured, or should it opt to be self-insured?

“Choosing the right kind of health plan is an important part of the success and growth of a company,” says John Mills, senior director of consumer products at UPMC Health Plan. “There are a lot of misconceptions about which plans are right for which kinds of companies and you have to look at all the evidence before you decide.”

Smart Business spoke with Mills about the advantages and disadvantages of self-funded and fully funded plans for companies large and small.

What is the difference between self-funding and fully insured?

The traditional definition of self-funding is when a company pays for its own medical claims directly, usually while a third-party administrator (TPA) processes claims, issues ID cards and performs the function of a health plan.

In contrast, when a company chooses to be fully insured — the more common option for smaller businesses — the company pays a set premium price to the carrier that is fixed for the year and is based on the number of employees enrolled each month. The insurance company assumes the financial and legal risk of loss if claims exceed projections.

Can small companies afford to be self-funded?

Companies with fewer than 250 employees are often afraid that they will be exposed to too much risk with a self-funded plan.

However, smaller companies can still afford to be self-funded because they can purchase stop-loss insurance, which limits the amount of claims expenses an employer would be liable for, per covered employee, per year. This protects a company against some sort of catastrophic event involving one or more employees. Stop-loss insurance reimburses an employer’s health plan for claims above a pre-set limit.

What are the advantages of self-funding?

The most obvious advantage is paying for actual claims incurred by your employees. This means there is no chance of being ‘penalized’ if your employees in a given year use fewer medical services than had been anticipated. Any positive results that come from a company instituting wellness programs and smoking cessation campaigns can have a direct result on the bottom line.

Also, a company can easily obtain a company-specific claims report that can reveal, for instance, what percentage of claims are out-of-network, and how much is being spent on emergency room visits. This kind of information can provide direction when it comes to customizing benefit changes.

What are the advantages of fully funded plans?

Cost certainty is a major one. You know at the beginning of the year what will be your health care costs and they remain in place until a new deal is struck. Also, the health insurer assumes all of the risk and the company is spared any exposure.

What are some disadvantages to self-funding?

Self-funded plans that greatly exceed anticipated costs can create problems. Although stop-loss coverage can protect an employer from paying excessive claims in a given year, after a major incident, the cost of the stop-loss coverage the company purchases is likely to rise. It may also be more difficult to get lower rates from other stop-loss providers.

Moreover, higher-than-expected claims in self-funded plans can make it more difficult to return to a fully funded plan later. And, any organization that chooses to run a self-funded plan internally, rather than use a TPA, can run up higher-than-expected administrative costs.

Self-funding is not a quick fix and savings are not always guaranteed or immediate. In order to make a good decision, you need to study past coverage utilization, cash flow and the health status of the employees being covered.

Insights Health Care is brought to you by UPMC Health Plan