How a workplace wellness program can be convenient and inexpensive

Setting up a wellness program at your company shouldn’t be burdensome. And if you need some encouragement that it will pay dividends, turn to Rand Corp.’s recent Workplace Wellness Programs Study, which found that for each $1 invested in a workplace wellness program, $1.50 is returned.

There are several levels of activities that you can offer, depending on how involved you want to be, from blood pressure screenings to weight loss to smoking cessation programs.

“It’s important to really assess health risks that are impacting your own employee population,” says Amber R. Hulme, Medical Mutual Vice President for Central and Southern Ohio. “Wellness programs also help with absenteeism — they help make people feel better and make them want to come to work. The better you feel, the more you are engaged.”

Smart Business spoke with Hulme about how to start a workplace wellness program.

Where do you start? Do you check with your insurance provider for resources and incentives?

Yes — do that initially. You want an official baseline of your employees’ health risks. A baseline is easy to achieve with a health screening and health assessment questionnaire, which is often done online.

Health screening is vital so people know their numbers. But the health assessment is where you really get the data behind the screenings. A minimum of 30 employees is a good number to establish a baseline.

Are wellness programs suitable for companies of any size?

Yes. Obviously, the larger the employee base, the more data you can work with. For example, Medical Mutual can provide a report showing the percentage of tobacco users, diabetics or overweight employees based on a large enough sample size. You can then develop a wellness program that addresses the primary concerns of your employee population. The program can include incentives to encourage employees to go to a gym or participate in other fitness-related initiatives. But a wellness program can work regardless of the size of the company and doesn’t require an on-site gym. If you do have a gym, that’s great, but it doesn’t mean you have to have one. There are plenty of creative ideas that can be used to make a great wellness program.

What about a company culture factor?

Making wellness part of your company culture is important; employees should feel that it’s an initiative from the top. The culture of the organization really needs to change to be more focused around lifestyle behaviors that make employees healthier.

Another thing to consider is how to best communicate with your employees. Survey your employees to find out what type of communications would help drive their performance.

Should a company offer incentives for employees to join the wellness program?

Use your survey to learn about what rewards are worth the extra effort. Don’t just throw a large amount of money at employees with the expectation that it will engage them.

You may be surprised how a small incentive or recognition by the company can promote participation. Allow your employees to participate online to select the wellness programs. Consider having an employee wellness committee. Ask employees to get involved, so it’s not just coming from management, but from everybody. Having all levels of the organization involved in trying to improve their health is important to a company.

What is the final step?

Make sure to have senior management buy in. If you get your CEO or CIO or whomever involved and active in the wellness program, employees can share in the experience with someone at that level. This upper-level buy-in can encourage participation because employees feel they are all part of the same team.

When employees see that management cares enough about wellness to participate, it makes an impact. And that participation can lead to positive communication and interaction.

A good wellness program impacts everybody in the company, no matter their job title. It puts everyone on the same playing field because we all go through the same struggles.

Insights Health Care is brought to you by Medical Mutual

How to build a narrow health care network to fit your group’s needs

Self-funded or partially self-funded health plans continue to be a growing trend for employers interested in more control over their health care costs. In 2013, 83 percent of covered workers at larger firms — 200 or more employees — were enrolled in partially or completely self-funded plans, according to an annual survey by the Kaiser Family Foundation and the Health Research & Education Trust. For small firms, self-funding included 16 percent of covered workers.

In addition, 6 percent of firms offering fully insured plans reported on the survey that they intend to switch to self-funding.

But with self-funding, employers can achieve additional savings by understanding how to build narrow networks to go along with their benefit plans.

“We’ve built five of these narrow networks in the past 12 months. It’s picking up momentum. We’re seeing quite a bit of interest,” says Erin C. Davidson, a sales account executive II at HealthLink. “If you’re looking to get creative to control costs that’s the way to do it.”

Smart Business spoke with Davidson about how to get started on building the best narrow network for plan members.

Once you decide to self-fund and need a narrow network, what is the first step?

The first step would be to work with your broker or current health care carrier or network to see if that carrier or network performs this service. If they don’t, it may be in the employer’s best interest to find a managed care network that can provide you with this area of expertise.

Why is this partnership with a managed care network so important?

The managed care network can perform modeling of the narrow network contract to ensure it is successful.

A managed care network also can help protect the employer. A sophisticated contracting team can help incorporate language about charge master increase limits, stop loss provisions and excluded services to keep employers from being exposed to higher billed charges from hospitals.

What’s an example of how a narrow network provides value to employers?

In one instance, two hospitals in the same county yielded a 50 percent discount. However, using the managed care network’s modeling tools, each cost of care could be further examined to look at the types of cases treated and average cost per patient. The adjusted cost at the two hospitals was $16,755 per day or $9,891 per day. Then, the employer can still provide members access to care at the most costly facility, but benefit plan designs can be implemented to drive members, via reduced out-of-pocket amounts, to the lower cost provider.

Are there certain businesses that should make building a narrow network a priority?

There is no one industry or type of business that can benefit more from a custom contract. However, there are certain scenarios that are more ideal. A community with two hospitals can provide higher cost savings. Companies with dense population centers in a tight geographic area, such as 100 or more employees living in one community, also are able to create stronger networks. This is because these employers have more ability to steer members to certain facilities, which a hospital system wants to encourage.

What best practices can ensure an organization is getting the most value?

The key is to ensure you’re continually improving, and that takes a collaboration of the provider or employer, broker and managed care company who all work together to ensure claims are objective and being met.

In addition to narrow network development, there are other best practices like steering members to domestic centers of excellence, gain share models and reference-based pricing, which are all variations on the same theme. They all try to incorporate leverage, steerage, improved outcomes and transparency in an effort to reduce costs. So, ultimately, a strategy is for employers to employ some, if not all, of these to find the right fit.

Most importantly, you don’t have to do this alone. That’s why the right managed care network is so important.

Insights Health Care is brought to you by HealthLink

How to educate employees on emergency department use

Using an emergency department (ED) for routine treatment is generally seen as a waste of health care resources and a contributor to rising health care costs.

But any employer hoping to be able to educate his or her employees about judicious use of the ED has to understand this is no easy task. Not even hospital employees have fully gotten the message. A recent study by Thomson Reuters found that hospital employees spent 10 percent more on health care and were 22 percent more likely to use the ED than employees in other industries.

“There are reasons that people continue to use the ED for non-urgent care,” says Dr. Stephen E. Perkins, vice president of Medical Affairs for UPMC Health Plan. “Understanding the factors behind the usage is an important first step toward reducing unnecessary ED visits.”

Smart Business spoke with Perkins about how to educate employees concerning ED use in order to reduce costs and improve care.

What are some reasons people like to use the ED for non-acute care?

Basically, when primary care is thought to be inadequate for the problem, and patients feel they cannot get timely care anywhere else, many will consider using the ED.

Getting in to see a primary care physician on short notice can be difficult, if not impossible, and physically getting to a physician’s office is a problem for some as well. In contrast, going to an ED means being seen — at least, initially — immediately. Transportation to an ED is often easier; some who arrive are even transported by ambulance.

Also, some patients ‘trust’ hospitals more than outpatient facilities such as urgent care centers. The sense that a hospital is the place for any serious ailment has been ingrained in many people over the years.

How big a problem is this?

A recent Rand Corporation study found 37 percent of all ED visits could be considered to be ‘non-urgent.’ The definition of non-urgent care may differ, but generally speaking, that statistic indicates many people are being treated in EDs who could be served as well, or better, in other settings.

What do employers need to do to engage and educate their employees about appropriate ED use?

Employers need to build awareness of ED alternatives. Employees need to know more about what urgent centers can and cannot provide. They also need to know that primary care can be a more viable option. Employers must educate employees about facilities such as urgent care centers, which are more appropriate for certain conditions.

Patients need to use good judgment in deciding whether to go to an ED. They need to learn the signs of serious illness and then trust their instincts.

When possible, calling a primary care physician and describing your condition is a preferable first step. If the physician is your regular physician, he or she will understand your health history and can direct you to the care that would be most appropriate.

What kinds of symptoms would warrant going to an ED and which do not?

It is appropriate to go to an ED if you notice symptoms like chest pains, trouble breathing, a head or back injury, persistent bleeding or vomiting, loss of consciousness, poisoning, a major burn or cut, or choking. For other medical emergencies such as a minor sprain, a small cut or a sore throat, treatment is better suited for an urgent care center or a primary care physician’s office.

Many physicians now have evening and weekend hours, so even if the office is not open, a doctor is on call. He or she can listen to your symptoms, taking into account your health history, to prescribe a course of action. This could include a visit to an ED or urgent care center, or the physician could schedule an office appointment or give instructions for treating a problem at home.

Employees also need to know that urgent care centers offer many similar services as EDs, such as X-rays and blood tests.

Why should employers take the time to educate employees about ED usage?

It is important to build awareness of ED alternatives because reducing non-urgent use of the ED, which in turn lowers health care costs, requires that you engage and educate people on how to choose appropriate care.

 

Insights Health Care is brought to you by UPMC Health Plan

How to better manage your workforce during times of change

The old adage that “change is the only constant” certainly holds true in the workplace. Change can be technological, systemic or organizational. Whatever its form, some kind of change is inevitable.

“Leaders will always be faced with turnover, the implementation of new systems, reorganization and other changes to their environment,” says Tom Koloc, LPC, NCC, a senior account manager for LifeSolutions, an employee assistance program, which is part of the UPMC Insurance Services Division. “What’s important is to know how to manage change and handle the transition.”

Smart Business spoke with Koloc about how change impacts employers and employees, and how to best manage it.

Is there a difference between change and transition?

William Bridges, who authored the book, ‘Managing Transitions: Making the Most of Change,’ writes that change is situational and, to some extent, external to the people involved. Change is often sudden and abrupt and provides employees with little or no time to prepare. Some examples of workplace change would be changes in leadership or work rules, such as ones that govern overtime.

In contrast, transition can be slow. It’s the internal psychological process through which people gradually accept a new situation and the changes that come with it.

What is management’s role during the transition period?

The way leadership handles transitions can significantly impact the outcome. The first part of a transition period usually involves denial, shock and anger. The loss that employees feel can be both tangible and intangible. But in all cases, it is important for leaders to express empathy for what employees are going through and to be specific about any policy changes.

Generally, transition requires an understanding of and support for what the employees are experiencing.

What should leaders focus on?

It’s important to respect the past, and not be negative or ridicule the old ways of doing things. The change may be for the better, but employees have invested time, energy and emotion in the way things were done in the past and that needs to be respected.

Employees also need to be given details about changes, as well as an opportunity to ask questions. Employers need to embrace communication avenues because communication is one of the best ways to ease fears of the unknown. Regularly sharing updates when available is a good practice. Remember, when employees hear nothing, they are more apt to fill the void with rumors.

Above all, be visible during these periods. Leaders who interact with employees will raise their employees’ level of engagement.

How does a leader deal with skepticism?

Skepticism and ambivalence can change to hope and enthusiasm if leaders remember what Bridges calls the four Ps, which are:

  • Purpose: It is important to explain why changes are happening. Explaining the rationale behind change can help people get beyond their initial resistance.
  • Picture: By sharing a vision of what the new organization will look like and feel like, you can break down resistance.
  • Plan: Lay out a detailed step-by-step plan. A timeline can help keep people on task.
  • Part: Give employees a part to play in the new arrangement. With responsibility, employees gain a sense of ownership.

What else should employers know?

Managers and supervisors play an integral role in how effectively their staffs navigate workplace change. But a transition can be equally as challenging for leaders. Leaders must deal with their own reactions, while they successfully usher staff through a challenging experience or situation. Leaders need to know that taking care of themselves is not only good for them personally, but also sets a great example for employees.

A leader who can acknowledge a personal sense of loss or other honest reactions, while also demonstrating optimism moving forward, will be the most effective.

As always, communication is an essential part of any transition. And, don’t be afraid to reach out for resources, such as an employee assistance program.

Insights Health Care is brought to you by UPMC Health Plan

How to encourage medication adherence to decrease health costs

Chronis Manolis, RPh, vice president of pharmacy, UPMC Health Plan

Chronis Manolis, RPh, vice president of pharmacy, UPMC Health Plan

It was the late C. Everett Koop, a former U.S. surgeon general, who once famously said: “Drugs don’t work in patients who don’t take them.” That’s a simple way to look at a costly and complex problem — medication non-adherence — where the failure to take drugs on time in the dosages prescribed is both dangerous for patients and costly to the health care system.

“There are a number of reasons that people either don’t take their medication or stop taking it before they should,” says Chronis Manolis, RPh, vice president of pharmacy for UPMC Health Plan. “But what it often comes down to is a lack of understanding of the disease and a lack of respect for the condition.”

Smart Business spoke with Manolis about the problem of medication non-adherence and the ways it can be addressed.

What does medication non-adherence cost?

This problem impacts the cost of health care in many ways. According to the Express Scripts Drug Trend Report, $329 billion was spent on avoidable medical and pharmacy expenses as a result of patients not being adherent to medication treatments. Approximately 50 percent of patients do not take their medication as prescribed, which results in increases in the overall cost of treating chronic conditions and increases the number of hospitalizations and emergency department visits.

Why is medication non-adherence a persistent problem?

Clearly, there are a number of reasons why people may not take their medicine as directed by their physician. Consider, for example, people who have asymptomatic conditions such as high blood pressure, cholesterol disease and Type 2 diabetes. For them, taking medication may have no immediate effect on the way they feel. And, when medicine does not make you feel better, some don’t understand why they need to take it. As a consequence, many do not.

What are other factors that contribute to medication non-adherence?

Well, first, there’s the cost of the prescription. If there’s no generic available, it can be expensive, and a patient may simply choose not to purchase it. Then, there’s forgetfulness, which is a factor for older patients, but also for others as well. Some patients may avoid taking medicine because they fear the possible side effects. Others may not take it because they do not believe that the medication is truly effective.

But, what is often the underlying cause is a basic lack of understanding of their condition. Many patients do not realize they are taking medicine now in order to stay healthy in the years to come and to avoid a more serious condition 10, 20 or 30 years later when it will be too late to treat it with medication. For some, that’s a hard concept to grasp.

What kinds of solutions would help promote medication adherence?

Solving the problem of medication non-adherence is complex because there is no ‘one size fits all’ solution. A comprehensive, multi-pronged solution is needed to improve medication adherence.

These include promoting the need for more conversation between physicians and patients concerning the importance of medication in the overall treatment plan. There also needs to be a way to involve pharmacists more. Pharmacists are uniquely positioned to reinforce the message regarding the importance of medication. This can include encouraging patients to use their medication as prescribed and asking patients if they understand why they are taking a drug and if they understand the condition that it’s being used for.

Health plans can play a role as well because they can determine if patients are refilling their prescriptions in a timely manner. Health plan pharmacists can reach out to non-adherent patients and provide customized solutions and tools for patients to improve adherence. Additionally, health plan pharmacists can help triage specific patient adherence issues to other members of the health plan’s team including care managers and health coaches. For example, if cost is a factor, often less expensive generics are available. If forgetfulness is a problem, pillboxes or enrolling in refill reminder programs could work. Or, finding a substitute for the medication or changing dosing and/or frequency of the medication can eliminate side effects.

Chronis Manolis, RPh, is a vice president of pharmacy at UPMC Health Plan. Reach him at (412) 454-7642 or [email protected]

Save the date: Join UPMC WorkPartners for an upcoming webinar, “Best Practices for Return-to-Work,” at 10 a.m. Aug. 6. To register, contact Lauren Formato at [email protected] or (412) 454-8838.

Insights Health Care is brought to you by UPMC Health Plan

How postponing the employer mandate impacts your business

Mark Haegele, Director, Sales and Account Management, HealthLink

Mark Haegele, Director, Sales and Account Management, HealthLink

When the news came out July 2 that the Affordable Care Act (ACA) employer mandate — the enforcement of the shared responsibility requirement — would be postponed until 2015, you may have felt relief. But for many large-group employers, it’s not so simple.

“This is not a reason to put your head back in the sand,” says Mark Haegele, director of sales and account management at HealthLink. “Keep your eyes open. See what’s going on. Run some cost benefit analyses of different scenarios of offering different levels of coverage, or not offering. The bulk of the health care reform law is still being implemented on Jan. 1, 2014.”

In fact, Haegele says in some instances it may make sense to follow the employer mandate now, as waiting until 2015 could cause certain problems downstream.

Smart Business spoke with Haegele about what this delay means for business owners and their employees.

What was delayed until January 2015?

The Obama administration announced a one-year delay of the requirement that insurance companies and employers report certain information about health insurance coverage offered to individuals and employees, as well as the employer mandate.

It doesn’t change anything relating to the community rating rules, the individual mandate, the $8 billion sector tax, etc. These provisions are causing employers to explore self-funding, and all are still in play for January.

In what scenario does waiting to follow the employer mandate in 2015 create problems?

Large employers — those with 50 or more employees, according to the legislation — with employees who work 30 to 39 hours who don’t receive insurance face a unique situation. These employers were expecting to either pay a penalty or the need to offer some form of coverage. Many contemplated offering minimum essential coverage plans, or skinny bones plans, that just cover prevention and wellness — no hospitalization.

Let’s say an employer has 300 employees who work 30 to 39 hours and receive no benefits, and with the delay the company doesn’t plan to offer any until 2015. These employees still must have insurance coverage to meet next year’s individual mandate.

Many also are eligible for sliding-scale subsidies on the new health care exchanges — those with an income level 400 percent or lower than the federal poverty level. In 2013, that qualifies any family of four with an annual income of less than $94,200, or $45,960 for an individual.

Fast forward to 2015, a portion of the 300 employees have gone on the exchange and gotten insurance with subsidies. Now, you want to provide pared-down benefits to avoid the employer mandate penalties, which basically strips the employees of their subsidy, possibly increasing their insurance costs and/or decreasing their coverage. This might make it worthwhile to price out minimum essential benefit plans for 2014. Otherwise, employees may believe you did this to them, causing retention problems.

What other concerns does the delay raise?

More Americans will be accessing federal subsidies for health insurance, but the Internal Revenue Service (IRS) won’t be collecting employer mandate penalty revenue, as originally projected. With less money coming in and more going out, it may impact the ACA’s sustainability.

Originally, the ACA required insurance companies and employers to send an informational return to, for example, the IRS. This was meant to help enforce the individual mandate by offering a secondary source about whether individuals are covered by health insurance. With the delay until 2015, there is no way to match up the employer informational returns with the individual tax returns, which may make the individual mandate more difficult to enforce.

So, what are some next steps for business owners?

In addition to considering whether it’s worth offering coverage even though the penalties won’t start until 2015, you still need to implement complicated procedures that measure how many hours variable employees work on average. Companies need to work on their approach even in 2013, as transitional relief going into 2015 is more unlikely after a one-year delay. You’ll want to get it right the first time.

Mark Haegele is director of sales and account management at HealthLink. Reach him at (314) 753-2100 or [email protected]

Website: Visit www.healthlink.com/key_business_trends.asp to learn more about transparency and other key health care business trends.

Insights Health Care is brought to you by HealthLink

How the Affordable Care Act changes will affect employers

Marty Hauser, CEO, SummaCare, Inc.

Marty Hauser, CEO, SummaCare, Inc.

With so many provisions and mandates under the Affordable Care Act (ACA), it is not surprising some things have changed or been delayed along the way.

In fact, on July 5 the Obama administration released a 606-page document with final regulations on some of the ACA’s key provisions and mandates. In addition to providing new details about how the health insurance marketplaces will operate beginning Oct. 1, the document included changes that will impact the way employers shop for insurance.

Separately, on July 2, the U.S. Treasury issued guidance delaying the penalties to be imposed on large employers that fail to provide coverage to full-time workers and also reporting requirements applicable to insurers and self-insured businesses.

“When you are looking at changes impacting the health care delivery system in this country — including the way health insurance companies do business — delays and changes are expected,” says Marty Hauser, CEO of SummaCare, Inc. “The best thing employers and individuals can do is to stay informed and make the best decisions possible when it comes time to shop for a benefit plan.”

Smart Business spoke to Hauser about some of these changes and delays and what they mean for employers.

What are some ACA mandates that have been delayed that directly affect employers?

Components of the employer mandate have been delayed until 2015 to give employers more time to prepare for changes and requirements. The mandate, often referred to as ‘pay or play,’ requires employers with 51 or more employees to offer health insurance or risk paying a penalty. The delay of the mandate’s penalty portion gives employers an additional year to consider their options for offering insurance.

While some people argue that the delay in penalties effectively delays the entire mandate, it’s important to note that the mandate for large group employers to offer insurance still exists, but with no penalty for not complying. It is in the employer’s best interest to work with their broker, benefits consultant or insurer in an effort to comply with the law and figure out the best solution next year and in preparation for 2015.

At the time of this printing, this delay in the employer mandate does not change the individual mandate, effective Jan. 1, 2014.

A delay impacting small employers (with up to 50 employees) has also occurred related to the Small Business Health Options Program (SHOP). The functionality enabling employers to offer employees a variety of qualified health plans (QHPs) from different carriers has been delayed until 2015. This means that in 2014, small group employers may only offer one QHP to their employees shopping through the marketplace in an effort to give the exchange additional time to prepare.

It’s also important to mention that the SHOP is available to employers with up to 50 employees in 2014 and 2015, and expands to include employers with up to 100 employees in 2016.

What should employers keep in mind as they see marketing campaigns about the changes that become effective next year?

First and foremost, employers should work with their broker, benefits consultant, or insurer to help determine what mandates and provisions of the ACA apply in 2014 and beyond, in order to make the best benefits decisions for their employees and budget. They should also be prepared to receive and answer questions from employees regarding coverage in the coming year.

Additionally, since marketplaces open Oct. 1, 2013, for 2014 effective dates and employers are required to notify employees of the availability of the health insurance marketplace by the same date (Oct. 1), employees will likely be looking to their employer for guidance on coverage options and want to know what their employer plans to do by way of offering benefits.  Employers should be ready to educate their employees on how the new laws will or will not affect them and their benefits.

It’s also important to remember that although the penalty portion of the employer mandate has been delayed, there are ACA requirements employers must still meet, including reporting and payments, marketplace notification, distribution of Summary Benefits and Coverage documents upon renewal or enrollment, and distribution of rebates, when applicable.

Marty Hauser is CEO at SummaCare, Inc. Reach him at [email protected]

Website: To learn more about health care reform, visit www.summacare.com/healthcarereform or www.healthcare.gov.

Insights Health Care is brought to you by SummaCare, Inc.

 

How 2014 health care reform provisions will affect employers

Marty Hauser, CEO, SummaCare, Inc.

Marty Hauser, CEO, SummaCare, Inc.

The Affordable Care Act (ACA) contains a total of 91 provisions, bringing change to the insurance market and impacting the type of coverage employers offer their employees.

“Many of the upcoming ACA provisions depend on the size of your employee population,” says Marty Hauser, CEO of SummaCare, Inc. “Employers need to understand these provisions, as they will likely determine what kind of coverage you offer your employees.”

Smart Business spoke to Hauser about how some key provisions impact employers.

What are some provisions impacting all employer groups?

Although some provisions of the ACA are based on the number of employees an employer has, others apply to all employer groups, regardless of size. These provisions include, but are not limited to, guaranteed issue and renewal of health insurance plans, no pre-existing condition exclusion, employer notification of the health insurance marketplaces and an increase to the maximum allowable reward for health-contingent wellness programs.

Beginning Oct. 1, 2013, employers will be required to notify employees of the availability of the health insurance marketplace, formerly known as exchanges. The marketplace is an online portal that will allow consumers and employers to find and compare different health insurance options. Employers must provide employees, regardless of plan enrollment status or part-time or full-time employment status, a written notice informing them of their coverage options. The Department of Labor (DOL) has created three different model notices for employers to communicate this information to employees, and these are available on the DOL’s website.

Another provision impacting all employer groups is the increase to the maximum allowable reward for health-contingent wellness programs from 20 to 30 percent of the cost of coverage. The program must meet five regulatory requirements to qualify as a health-contingent wellness program.

What are some provisions impacting small group employers?

Beginning in 2014, the marketplace will operate a Small Business Health Options Program, or SHOP, that offers choices when it comes to purchasing health insurance for small group employers — with up to 50 employees in 2014 and increasing to 100 employees in 2016 — and their employees.

Through the SHOP, employers will eventually be able to offer employees a variety of Qualified Health Plans (QHPs) from different carriers, and employees can choose the plan that fits their needs and their budget. In 2014, however, small group employers will be limited to offering only one QHP to their employees, as the provision allowing choices between multiple carriers has been delayed until 2015.

In addition to the availability of the SHOP, small group employers with fewer than 25 full-time employees, or a combination of full-time and part-time employees, may be eligible for a health insurance tax credit in 2014 if they offer insurance through the SHOP and meet other criteria, such as the average wages of employees must be less than $50,000, and the employer must pay at least half of the insurance premium.

What are some provisions impacting large group employers?

Effective Jan. 1, 2014, employers that employ an average of at least 51 full-time employees are required to offer employees and their dependents an employer-sponsored plan or the employer pays a penalty, often referred to as ‘pay or play.’

This provision has specific criteria meant to not only define and determine the number of employees in the group, but also to confirm the employer is providing affordable, minimum essential coverage. Part-time employees count toward the calculation of full-time equivalent employees, and there is no penalty if affordable coverage is offered.

If an employer doesn’t provide adequate health insurance to its employees, the employer will be required to pay a penalty if its employees receive premium tax credits to buy their own insurance. The penalties will be $2,000 per full-time employee beyond the employer’s first 30 workers. Penalties paid by the employer will be used to offset the cost of the tax credits.

Marty Hauser is CEO at SummaCare, Inc. Reach him at [email protected]

Website: Visit our website to learn more about health care reform or go to www.healthcare.gov.

Insights Health Care is brought to you by SummaCare, Inc.

How to spur health care cost transparency at your company

Mark Haegele, Director, Sales and Account Management, HealthLink

Mark Haegele, Director, Sales and Account Management, HealthLink

Health care cost transparency is the ability of patients to learn how much a medical service or treatment costs, preferably before receiving the service or treatment. This is important because treatment and service costs vary widely from doctor to doctor and from facility to facility.

“In all my travels, with all the different hospitals I visit — hundreds of them — only one had the general charges of fees and services, like cost per day in the hospital, posted up on the wall. It just doesn’t exist today,” says Mark Haegele, director, sales and account management, at HealthLink.

“This system has made it difficult for people to get the information. We’re getting there, but a spotlight on transparency and the cost and options gives people a little more decision-making authority,” he says.

Smart Business spoke with Haegele about the shift toward transparency and helping employees shop for better health care prices.

Why do health care prices vary so much?

Physicians are just trying to diagnose you to help you get better. In addition, surgeons only get paid if they recommend surgery. So, cost doesn’t really weigh into whether patients get knee replacement surgery or are sent to therapy for six months.

If you go to a store and look for a refrigerator, one of the first things you try to figure out is the price. But if you go to the doctor, and you’re talking about getting your knee replaced, that conversation — if it ever comes up — comes up at the very end.

The average treatment for heart failure might vary by tens of thousands of dollars within the same city. A list of Medicare costs, released by the Centers for Medicare & Medicaid Services, found a difference of $21,000 to $46,000 in Denver, Colo., or $9,000 to $51,000 in Jackson, Miss.

Only some rate differences are because of health care’s complexity. If two people with the same insurance get a tonsillectomy at the same hospital, they still could have different doctors ordering different levels of anesthesia and pain medicine with different philosophies on hospital-stay length.

How does transparency lower costs?

As the government, media and patients push for reliable cost and quality information, it motivates the entire system to provide better care for less money. For example, according to the book “Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care,” the governor of New York mandated that hospitals publish their mortality rates for heart surgery. By the year following, hospitals started implementing quality metrics to reduce mortality, and the trend in the mortality rates dropped dramatically, which ultimately saved lives.

In another instance, a Thomson Reuters study of a Chicago employer found a cost variance of 125 percent for health insurance members receiving an MRI of the lower back without dye, with similar differences in diagnostic colonoscopies and knee arthroscopy procedures. If employees were given information to select providers at or below the median cost, it was estimated the company could save $83,000.

What can benefit administrators do to help facilitate transparency?

As a general rule we feel helpless, but there are some things benefit administrators can do to move costs. You’ve got to get information out to members, and then align incentives. The average member, once he or she meets the $2,000 out-of-pocket maximum, for example, doesn’t care if a hip replacement costs $5,300 or $223,000. They should — but most don’t make better purchasing decisions until it impacts them.

Under a self-funded health plan, you have more control over what you are able to publish and demonstrate to employees, as well as more ability to align incentives. But regardless, you need to start identifying costs of providers of key procedures to treat your health plan like an asset.

By putting together a best-in-class grid for your members, and then aligning incentives to ensure they use the lowest cost providers, such as giving a $200 gift card, you can empower your members and move the needle on health care cost.

Mark Haegele is director of sales and account management at HealthLink. Reach him at (314) 753-2100 or [email protected]

Website: Visit the website to learn more about transparency and other key health care business trends.

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How defined contribution plans can help ease the rising cost of health care

John Mills, senior director, Consumer Products, Product & Consumer Innovation, UPMC Health Plan

John Mills, senior director, Consumer Products, Product & Consumer Innovation, UPMC Health Plan

Historically, defined benefit plans have held a dominant position in the health care market since they were first introduced in the middle of the 20th century. Because the contributions were tax-deductible for employers and pre-tax for the employees, it was a popular way to increase employee benefits without raising wages.

But over the years, the rising cost of health care has caused employers to re-examine how much they pay for insuring their employees and caused them to think more about defined contribution plans.

“With a defined contribution plan, an employer can decide exactly how much they want to contribute to an employee’s health insurance and have a certainty about the cost,” says John Mills, senior director, Consumer Products, Product & Consumer Innovation at UPMC Health Plan. “And a defined contribution plan can be offered by a company of any size.”

Smart Business spoke with Mills about defined contribution plans and their increasing popularity with employers.

What is a defined contribution plan?

Technically speaking, a defined contribution plan is not any specific kind of health plan. Instead, it is a concept that can be applied to different approaches that employers can use to manage health care for employees.

With a defined contribution plan, a company gives each employee a fixed dollar amount that the employees can use to purchase health insurance and dental and vision benefits.Some employers will allow employees to put any money not spent on these benefits into a flexible spending account or to take as a cash benefit.

Why are these plans becoming so popular?

Certainly, the rising cost of health insurance is a major factor in the increased popularity of defined contribution plans. Any plan that can place some kind of limit on health care expenses, or provide some certainty about how much money will be paid, will get close scrutiny by those companies concerned about the bottom line.

But defined contribution plans also touch on areas that are becoming more important to both employers and employees than was possible under managed care. These include:

  • The consumer’s desire to have more choice and involvement in health care.
  • Concern about quality.
  • Increased information.
  • More freedom for providers.

What are some common characteristics of defined contribution plans?

The most common characteristic is choice. Defined contribution plans are intended to give members greater flexibility in benefit decisions. The choices include: plan choices, care choices and the ability to opt out.

Other common characteristics include increased cost sharing between the employer and the member, as well as greater knowledge and engagement in management of health care by members.

What do employers like about defined contribution plans?

One popular feature is that there is no limit on the amount of money an employer can contribute to an employee’s defined contribution health plan. Also, there is no minimum contribution requirement. That allows the employer to set the amount that makes the most sense for the company.

Employers also can give employees different contribution amounts based on classes of employees. The combination of cost management and decreased employer involvement makes defined contribution plans very attractive.

What other factors are driving the growing popularity of defined contribution plans?

Rising costs of premiums are a factor, as is the desire of providers to regain control over decisions concerning patient care. At minimum, they want a greater ability to advise patients who will make the final decision.

Concerns about quality are another factor. There is evidence that defined contribution plans will enhance the quality of care and also increase the amount of information available on the quality of health care, which makes them popular when there is such a focus on quality. And, small businesses find that with defined contribution plans they can have a feasible way to provide some kind of health insurance for their employees.

John Mills is a senior director, Consumer Products, Product & Consumer Innovation, at UPMC Health Plan. Reach him at (412) 454-8821 or [email protected]

For more information about defined contribution plans available through UPMC Health Plan.

 

Insights Health Care is brought to you by UPMC Health Plan