5 Ways Employers Can Optimize the Value of Maternity Care for Employees
Original post benefitnews.com
For many employers, discussions with employees about pregnancy focus on one topic: maternity leave.
Yet, it is important to remember that length of maternity leave is only one of several important decisions made by an employee preparing for childbirth.
Expecting parents are highly engaged in selecting a provider and developing a birth plan — choices that will ultimately influence the cost and quality of care a mother and her child will receive. For younger employees, a pregnancy, whether their own or their spouse’s, may be the first significant contact he or she has had with the healthcare system, thus underscoring the weight attributed to each decision.
Maternity care is also an important issue for employers, as obstetric admissions are typically the single most common admission in commercial populations. Verisk Health’s normative database shows that on average, a maternity admission costs an employer upwards of $9,000, and pre-natal and post-natal care typically contribute another 20-30% of spend. When you consider that 6% of women between the ages of 19 and 44 have a child each year, the costs add up fast.
Given the importance of maternity care to both employees and employers, the question is how to optimize the value of the care your employees receive.
Understanding the value equation
High risk pregnancies and outlier cases aside, maternity care is a relatively homogenous condition category. However, there is substantial variability in cost. We have observed as high as 50% variation within costs in a single market for vaginal deliveries without complications.
Variations in utilization rates of certain procedures can also increase costs substantially without necessarily improving outcomes.
For example, here in Massachusetts, the Health Policy Commission found 50% variation in Cesarean section (C-section) rates among the top 10 hospitals (by number of discharges). This compounds the issue with hospital pricing, since C-sections can cost as much as 50% more than a vaginal delivery.
In addition to increasing costs, C-section overutilization can also lead to poorer outcomes. According to the American College of Obstetricians and Gynecology, C-sections put the mother at greater risk of infection, heavy blood loss, and surgical complications while simultaneously increasing the newborn’s risk of infection, respiratory issues, and lower APGAR scores.
Elective deliveries and episiotomies are also areas of potential overuse, and their incidence rates can be tracked to gauge the quality of care delivered.
While the American College of Obstetricians and Gynecologists requires 39 weeks of gestation prior to elective delivery, research shows that more than one-third of elective repeat C-sections are not performed in accordance with this guideline. When these guidelines are not followed, newborns are more susceptible to respiratory distress syndrome, temperature regulation issues, high levels of bilirubin, and hearing, vision, and learning defects.
In addition to restricting elective pre-term deliveries, ACOG also recommends restricted use of episiotomies due to the increased risk of muscle tear, bleeding, and infection. However, data indicates that episiotomies are an often used routine obstetrical practice.
Other maternity quality measures reinforce evidence-based standards of care. To reduce a mother’s risk of pulmonary embolism after C-section, ACOG recommends the use of pneumatic compression devices or venous thrombus embolus (VTE) prophylaxis. Likewise, all newborns should be screened for early onset hyperbilirubinemia prior to discharge from the hospital.
Driving greater value: The agenda for employers
Maternity care presents an ideal starting point for value-based purchasing initiatives because it is high volume, clinically homogenous, and exhibits wide variety in cost and quality. While decisions in maternity care will always be driven by patient preferences, here are a few ways employers can help improve the value of care their employees receive:
1. Know the numbers. Analyze your claims data to identify the top hospitals that your employees use, the amount you spend at each facility, and differences in costs between the hospitals. Use the quality measures published in the Leapfrog Hospital Survey to benchmark performance against nationally recognized standards.
2. Spark dialogue with providers. Once you’ve assessed which hospitals provide the best value for maternity care, share your analysis with the most significant facilities. In our experience, several larger employers are using their data to enable more transparent, collaborative conversations. If your presence is smaller, work with a local purchasing group to make your voice heard.
3. Raise awareness among expectant parents. In parallel with sharing data with providers, develop a communication plan to educate your employees about their options. Developing a birth plan is one of the most actively researched healthcare decisions, especially for first time parents. However, the research can often be more focused on the amenities of the facility than quality and outcomes. Since patient engagement is so high for maternity care, it may be easier to drive behavioral change among expectant parents than it is for other health issues often targeted by employers (e.g., weight loss).
4. Champion payment reform. Several state Medicaid programs have adopted innovative episode-based payment systems to reward high-value maternity care. Forward-thinking employers can use model contract language from Catalyst for Payment Reform to help incorporate these types of strategies into their agreements with health plans. According to CPR, payment strategies such as bundled payment and blended payment (a single rate for any type of delivery) can help address the issues associated with overutilization in maternity care.
5. Consider reference pricing and incentives. Long term, employers may consider changing plan incentives to encourage high-value maternity care. For example, an employee might shoulder a greater share of the cost burden for an elective C-section if it is not medically necessary or physician advised. Since personal preference is such a factor in maternity care delivery, this concept will need to be handled with sensitivity.
In many ways, maternity care is a microcosm of the challenges in our healthcare system. We routinely perform “medical miracles,” particularly for neonatal care, and yet there is substantial room for improvement in routine care. By advancing value-based purchasing initiatives, employers can play a key role in helping improve the cost and quality of maternity care.
How to Navigate a Consolidating Wellness Market
Original post benefitnews.com
The corporate wellness industry is growing up. And with maturity comes mergers, acquisitions and a flurry of opportunities that can lead to advances in technology and innovation.
Eventually.
Today, the landscape is confusing. Especially for HR and benefits buyers charged with navigating it. Here’s why:
● Large wellness providers are merging with each other to get bigger.
● Aggressive funding rounds are pressuring companies to innovate and grow quickly to meet investor expectations.
● Large wellness providers are acquiring niche solutions to market.
● Providers are building functionalities that go beyond traditional wellness program capabilities.
Corporate wellness certainly isn’t the first HR category to see wild fluctuation periods. All technology markets move through cyclical waves of change, which follow a surprisingly consistent cadence:
● A period of initial growth. Companies launch to compete with one another with similar solution sets, vying for popularity and mind- and market-share.
● A period of growth stymies. Growth hits a standstill due to economic conditions or market saturation.
● A period of consolidation. Larger players acquire market-share and technology enhancements through partnerships and mergers.
The HR world saw this cycle play out with integrated talent management systems in the early 2000s.
Back then, many different providers sold recruiting, performance management and learning technologies. Hundreds in each category competed with one another, and dozens attracted significant funding to try to dominate the market.
In 2007, the talent management market hit its peak. Companies consolidated, some went out of business, and eventually, we were left with a few dominant providers — SAP, Oracle and IBM.
What did these leaders do right during the industry’s tremendous growth cycle? They mastered their core platform capability before moving on to the next stage of an integrated platform.
So SuccessFactors, now a part of SAP, hitched its wagon to performance management and built a complete vision before expanding its talent management offering. Taleo (now with Oracle) and Kenexa (now with IBM) did the same with recruiting and learning, respectively.
Other talent management providers jumped on the integration bandwagon too early. They tried to cover everything ─ but weren’t good at anything. They couldn’t differentiate themselves in a crowded, shrinking market. Most were shut down or acquired.
I don’t know if corporate wellness will follow this exact path. But the history of enterprise technology indicates an inevitable tipping point. Here are my predictions for what’s to come:
1. Consolidation isn’t going away. It’s clear we’re in a phase of consolidation. Larger companies and private equity buyout firms are acquiring smaller companies, and we expect even more mergers and acquisitions to close the capabilities gap across wellness solutions.
2. The pressure’s on for heavily venture-capital-backed firms. Investors see a ticking clock in front of them. Many want their payoff, and they want it fast. The period of market consolidation doesn’t last forever — and the opportunity to quickly expand to get bought is often made at the expense of product stability, support and internal innovation. Exit pressure increases later in the life of a venture fund as well (for all but the most long-term investors).
3. Providers will jump into unfamiliar waters. Companies with niche offerings will try new things. Recognition providers might add well-being and learning services, and performance companies might try to add analytics tools. But merging different companies, cultures, customer-facing teams and approaches can be difficult and time-consuming, and potentially confusing for employees. Even when providers acquire companies that already specialize in purely complementary capabilities, the devil is in the details. Every acquisition takes time to integrate, and every new feature set takes time to develop.
4. Buyers will be frustrated with all of it. If you’re looking for stability and measured outcomes, then the wrong provider can be a nightmare of new account representatives, technology change and product difficulties. Corporate wellness as a category has room to grow into solutions that embrace the whole employee. Choose wisely.
Three things to focus on
It’s not an easy time to choose a long-term wellness partner. But buyers can take precautions to avoid getting swept into the carnage of acquisitions and consolidations. Here are some best practices to follow when you’re purchasing technology in an unsteady environment:
1. Prioritize your needs as an organization. What major issue is your organization trying to solve? In a crowded market, many challenges and solutions exist ─ but you need to prioritize what’s critical to your success. What is your company trying to achieve in the market? What key capabilities do you need to meet your overarching business goals? What features aren’t as important?
2. Address those needs. This seems obvious, but broader platforms often lure buyers into making decisions that compromise on critical areas. The solution you choose should have excellent bench strength in your highest priority area. For instance, if your main goal is improving employee well-being (and related outcomes), look for a partner that specializes in it ─ not a benefits provider with one small well-being feature.
3. Consider integration capabilities instead of a one-size-fits-all. One positive development of the consolidation phase? Companies want to make it easy for you to connect with different services. This means you don’t need a provider that does everything. Choose the (integration-ready) one you love ─ and tailor it to meet your own unique needs.
Choose technologies that meet your core needs rather than finding a provider that claims to do it all. If it seems too good to be true, it probably is. Focus on what’s important to your organization:
● What’s going to improve your employee experience the most?
● Who has the capabilities and people to guide you to your desired outcomes?
● What do you need right now, and what can you wait a few years for?
You are the only one who can answer these questions for your organization. When you do, you’ll find the corporate wellness provider that aligns best with your business strategy – and your employees’ needs.
5 Strategies to Cut Healthcare Costs without Cutting Benefits
Original post benefitsnews.com
For employers, it’s been an ongoing battle to keep health insurance costs down without cutting employee health benefits. According to a PwC report, healthcare costs will remain a challenge in 2016 as costs are expected to outpace general economic inflation with a 4.5% growth rate.
There is no single culprit in the battle against rising healthcare costs; rather, there are many drivers contributing to the increase. Soaring prices for medical services, new costly prescription drugs and medical technologies, paying for volume over value, unhealthy lifestyles and a lack of transparency concerning prices and quality are all factors contributing to the spike in premiums.
So what can you do?
It can be a difficult juggling act to keep your health insurance premiums from financially squeezing your business, while also providing a robust benefits package for your employees. However, you may have more options for controlling your company’s healthcare costs than you realize. With the right knowledge and planning, there are ways to keep health insurance costs from derailing your company’s profits while also providing your workforce with the benefits they need.
Here are five strategies to cut costs without minimizing the benefits offered to employees:
1. Level-funding company healthcare costs.
In between a traditional fully insured plan and a traditional self-funded plan lies an innovative solution known as level-funding.
Traditional fully insured plans are contracts between the employer and the insurer where the employer pays a predetermined and fixed amount per employee per month (PEPM) and the insurer assumes the financial (claims) risk, net of employee co-pays and deductibles.
Traditional self-funded plans are one in which the employer assumes the financial (claims) risk for providing healthcare benefits to its employees. In practical terms, self-insured employers pay for each out-of-pocket claim as they are incurred, and the model is almost always is packaged with stop-loss insurance in case of large claims.
Level-funding is a hybrid of the two aforementioned plans, whereby the plan is filed as a self-funded plan, but the employer is billed each month a fixed and unchanging premium per employee per month, and after a year or two may qualify for a refund of premium if claims were lower than expected, or receive a proposed increase to premiums at renewal if claims were higher than expected. Since these plans are filed as self-funded, they are typically exempt from state taxes and many of the federal healthcare law’s health insurance taxes, but subject to a modest annual transitional reinsurance fee.
Additionally, according to data from the U.S. Department of Health and Human Services, nearly 30% of employers with between 100 and 499 employees self-insures their benefits, and over 80% of employers with 500 or more employees self-insure their benefits.
2. Provide a proactive wellness initiative.
Health and wellness programs have become popular ways for employers to manage healthcare costs — and some companies are finding that employees are more engaged in these programs when they’re offered incentives, rewards or even disincentives for participating or attaining certain health-related goals. Some companies are also seeing an impact of incentives on their program ROI.
For wellness programs to be effective, they need to be robust and allow for individual needs and interests. Wellness programs need to be comprehensive and tailored to individuals; meeting them where they are and helping them keep their healthy goals and ambitions in check with robust resources.
One other important aspect of having an effective wellness program is measuring employee engagement. By determining their level of inclusion, employers can understand how to implement incentive-based initiatives for the future. And remember, leading by example is important to make your employees feel comfortable.
3. Implement tax-advantaged programs.
Tax-Advantage benefits programs allow for a reduced cost of living for employees by handling expenses using pre-tax dollars. This method ensures the use of money that is valued at 100% of a wage or salary, instead of paying with funds that are devalued due to taxation.
There are four major types of programs that utilize this method: flexible spending accounts (FSAs), health savings accounts (HSAs), health reimbursement arrangements (HRAs) and premium offset lans (POPs). Each program offers a different process for healthcare payments that involves both employers and employees, and can lighten the burden of rising medical expenses.
4. Use a flexible contribution arrangement (FSA).
Elaborating further on the aforementioned benefit programs, FSAs enable employees to collect and store money that can be used for medical expenses tax-free. FSAs may be funded by voluntary salary reductions with an employer, and there is no employment or income tax enforced.
Another benefit of FSAs stems from the ability of employers to make contributions towards an account that can be excluded from an employee’s gross income. From an employee’s mindset, an FSA allows for flexibility and a metaphorical safety net in case of a medical emergency.
5. Use deductible exposure mitigation vehicles (HRAs).
A health reimbursement arrangement is another tax-advantaged employer health benefit plan that can trim your tax bill and reduce the cost of medical services.
HRAs are an employer funded medical expensed reimbursement plan for qualifying medical expenses. These plans reimburse employees for individual health insurance premiums and out-of-pocket medical expenses. They allow the employer to make contributions to an employee's account and provide reimbursement for eligible expenses. All employer contributions are 100% tax deductible when paid to the participant to reimburse an expense. They are also tax-free to the employee.
Based on the plan design, HRAs can be an excellent way to supplement health insurance benefits and allow employees to pay for a wide range of medical expenses not covered by insurance.
What works, what doesn’t
It’s crucial to educate employees on available tools and programs — by doing so you can control costs, while simultaneously providing appropriate benefits and employee engagement. To make the most out of a conscientious business decision, take the time to understand what is and isn’t working for you on your current plan, and what your other options are.
By adopting these new healthcare benefit strategies, you are engaging your workforce and enabling them to have an active role in determining an appropriate course of action.
A proper benefits partner maintains track of legislation and regulatory changes, advocates for small to mid-sized businesses and has the expertise to prevent violations from unforeseen rules and laws. By enabling these programs and using the right benefits partner, you can see your company’s healthcare costs lower substantially.
Top 11 Employer FMLA Mistakes
Original post shrm.org
Employers should never take a holiday from dealing with the Family and Medical Leave Act’s (FMLA’s) requirements. Legal experts say the law is full of traps that can snag employers that let their guard down, and they recommend that employers shore up FMLA compliance efforts by avoiding the following common missteps.
No FMLA Policy
Employers shouldn’t skip having a written FMLA policy, Annette Idalski, an attorney with Chamberlain Hrdlicka in Atlanta, told SHRM Online. “If employers adopt a written policy and circulate it to employees, they are able to select the terms that are most advantageous to the company,” she said. For example, employers can choose to use a rolling 12-month period (rolling forward from the time any leave commences) rather than leaving the selection of the 12-month period to employees, who almost inevitably would choose the 12-month calendar period. The calendar period, unlike the rolling period, allows for employees to stack leave during the last 12 weeks of one year and the first 12 weeks of the new year. Check to see if state or local laws give employees the right to choose a 12-month period that would give them the right to stack leave.
Counting Light-Duty Work as FMLA Leave
Idalski said employers also often make the mistake of offering light-duty work to employees and counting it as FMLA leave. Light-duty work can be offered but must not be required in lieu of FMLA leave. For example, an employer can offer tasks that don’t require lifting to an employee who hurt his or her back and cannot perform heavy lifting. But if the worker wants the time off, the individual is entitled to take FMLA leave.
Silent Managers
Managers sometimes fail to tell HR right away when an employee is out on leave for an extended period, Idalski noted. If a manager waits a week to inform HR, that could delay the start of the 12-week FMLA period. The employer can’t make the FMLA leave retroactive, and letting the employee take more than 12 weeks of leave affects staffing and productivity, Idalski said. “Management must initiate the FMLA process with HR right away,” she emphasized.
Untrained Supervisors
Untrained front-line supervisors might retaliate against employees who take FMLA leave, dissuade workers from taking leave or request prohibited medical information, all of which violate the FMLA, said Sarah Flotte, an attorney with Michael Best & Friedrich in Chicago. Just because front-line supervisors shouldn’t administer FMLA leave doesn’t mean they shouldn’t be trained on the FMLA, she noted.
Missed Notices
Employers sometimes fail to provide required notices to employees, Flotte said. “The FMLA requires employers to provide four notices to employees seeking FMLA leave; thus, employers may run afoul of the law by failing to provide these notices,” Flotte remarked. Employers must give a general notice of FMLA rights. They must provide an eligibility notice within five days of the leave request. They must supply a rights and responsibilities notice at the same time as the eligibility notice. And employers must give a designation notice within five business days of determining that leave qualifies as FMLA leave.
Overly Broad Coverage
Sometimes employers provide FMLA leave in situations that are not truly FMLA-covered, such as providing leave to care for a domestic partner or a grandparent or sibling, noted Joan Casciari, an attorney with Seyfarth Shaw in Chicago. If they count that time off as FMLA leave, this could prove to be a violation of the law if the employee later has an event that is truly covered by the FMLA, she said. But the leave may count as time off under state or local FMLA laws, depending on their coverage.
Incomplete Certifications
Casciari added that employers sometimes accept certifications of a serious health condition that are incomplete and inconsistent. In particular, she said that businesses sometimes make the mistake of accepting certifications that do not state the frequency and duration of the intermittent leave that is needed.
No Exact Count of Use of FMLA Leave
Another common mistake is failing to keep an exact count of an employee’s use of FMLA leave, particularly in regards to intermittent leave, said Dana Connell, an attorney with Littler in Chicago. This failure is “highly dangerous,” he stated. An employer might give the employee more FMLA leave than he or she is entitled to. “The even greater risk is that the employer counts some time as an absence that should have been counted as FMLA, and that counted absence then plays a role—building block or otherwise—in an employee’s termination.”
No Adjustment to Sales Expectations
Some employers take too much comfort in an FMLA regulation that says that if a bonus is based on the achievement of a specific goal, and the employee has not met the goal due to FMLA leave, the payment of the bonus can be denied. “Notwithstanding that regulation regarding bonuses, courts have held that employers need to adjust sales expectations in assessing performance to avoid penalizing an employee for being absent during FMLA leave,” Connell emphasized.
Being Lax About FMLA Abuse
The FMLA is ripe for employee abuse, according to Connell, who said, “Some employers, especially in the manufacturing sector, find themselves with large numbers of employees with certified intermittent leave.” Those employers need a plan to keep all employees “honest with respect to their use of FMLA.” Connell said that surveillance may be a necessary part of an employer’s plan for dealing with potential FMLA abuse.
Overlooking the ADA
Employers sometimes fail to realize that a serious health condition that requires 12 weeks of FMLA leave will likely also constitute a disability under the Americans with Disabilities Act (ADA), noted Frank Morris Jr., an attorney with Epstein Becker Green in Washington, D.C. Even after 12 weeks of FMLA leave, more leave may be required by the ADA or state or local law as a reasonable accommodation.
“Document any adverse effects on productivity, ability to timely meet client demands and extra workload on co-workers resulting from an employee on extended FMLA leave,” Morris recommended. While the FMLA doesn’t have an undue hardship provision, “The information will be necessary for a proper analysis of whether any request by an employee for further leave as an ADA accommodation is reasonable or is an undue hardship” under the ADA.
- See more at: https://www.shrm.org/legalissues/federalresources/pages/top-11-employer-fmla-mistakes.aspx#sthash.kOREknrz.dpuf
Hearing and Vision Being Tied into Wellness Programs
Originalpost benefitnews.com
Medical experts have long argued that poor oral hygiene and neglected vision care can undermine overall physical health. The same thinking is now being applied to hearing loss, which is reportedly on the rise and taking a toll on employee productivity, emphasizing a need for more advisers and their clients to consider the inclusion of hearing and vision health with wellness programming.
Advisers “can make sure their clients are aware that healthy senses are often missing from traditional wellness strategies,” says Brad Volkmer, president and CEO of EPIC Hearing Healthcare, “and they can bring solutions to help clients integrate areas like hearing and vision health into their wellness offerings.”
As many as 30% of working Americans suspect they have hearing loss, but have not sought treatment and admit it has affected their work performance, according to a 2013 EPIC Hearing Healthcare survey of 1,500 U.S. employees.
This seems to be one area that worksite health and wellness has overlooked. A 2015 EPIC survey of 518 benefits professionals, for example, found that only 8% of employers integrate hearing health into their wellness programs. Most of those respondents (86%) said they were willing to take action if they knew that untreated hearing loss was hurting employee job performance.
As many as one-fifth of Americans 12 years or older have hearing loss so severe that it may make communication difficult, according to a Johns Hopkins study published in the Archives of Internal Medicine. Researchers estimate that 30 million Americans, or 12.7% of the population, have hearing loss in both ears, and about 48 million, or 20.3%, have hearing loss in at least one ear. What’s surprising is that 65% of people with hearing loss are actually younger than age 65, notes the Better Hearing Institute.
EPIC offers a hearing-health wellness program called “Listen Hear! Live Well” that can be integrated into an employer’s existing wellness effort or offered on a stand-alone basis. Among the company’s suggested tips for producers when talking with employer clients about the importance of treating hearing loss and maintaining healthy senses:
- Integrate hearing, vision and oral health into health education. The hope is that through these efforts, employers can help erase any stigma associated with hearing loss and quell employee fears about being poorly perceived by their employer. Content for company wellness newsletters, brochures, videos, presentations, advice hotlines, etc., is available free of charge through some programs.
- Check healthy senses through screenings. This can be done at employee health fairs and events with the help of local audiologists, optometrists and dentists who may be willing to offer complimentary screenings and deliver educational presentations.
- Make incentives accessible. Employers can offer incentives and discounts to employees who complete vision and hearing exams in order to promote preventive care. For example, those who participate in four educational activities in EPIC’sListen Hear! program can earn a discount on hearing treatments.
- Minimize financial barriers to care. Employers can elect to cover healthy senses through ancillary benefits and the use of various savings vehicles to help ease out-of-pocket expenses. An HSA or FSA can be used to help pay for hearing aids, eyeglasses or contact lenses. Without such assistance, these costs can be staggering. Hearing aids, for example, cost on average about $1,500, but can be as high as $3,000 to $5,000, according to the National Institutes of Health. Also, more than one-third of people surveyed in 2014 by Wakefield Research on behalf of National Vision, Inc. said did not see their eye doctor that year because they couldn’t afford the visit.
Wellness Study Touts CFPs
Original post benefitspro.com
Only 22 percent of employees tracked in Financial Finesse’s 2015 year in review report being on track for retirement.
The provider of workplace financial wellness programs says that is a slight improvement from 2014. Of those that are not prepared, 81 percent have never used a financial calculator to estimate their retirement preparedness.
While the number of retirement-ready workers remains bleak, those participants who have repeated engagements with planning tools, and financial planners, are showing marked improvement in retirement readiness.
Enhancements in retirement workplace plan design, like auto-enrollment and auto-escalation, and technology that addresses asset allocation are vital tools for addressing workers’ retirement preparedness.
But the Financial Finesse’s data suggests those tools alone are not enough.
A good portion of the review is committed to comparing retirement readiness of those savers who engage in live interactions with financial planners.
About half of participants that had five or more interactions with a certified financial planner report being on track for retirement.
Levels of confidence drop in lock step with the number of interactions with financial planners: 32 percent of those with three to four interactions say they are on track to retire with adequate savings; 31 percent with one to two interactions believe as much; and only 21 participants who only interact with online planning tools say they are on track to retire with enough savings.
Interacting with CFPs also translates to higher confidence with investments and how they are allocated, as 64 percent of participants with five or more interactions say they are invested appropriately, compared to only 42 percent who use an online planning tool but don’t seek live financial advice.
Overall, retirement readiness is lacking across generations. Last year, only 30 percent of baby boomers say they are on track to reach their retirement goal, which was unchanged from the previous year.
Only 22 percent of Gen Xers and 16 percent of millennials said they are on track to retire well.
Debt is a major obstacle for boomers’ retirement readiness, the report says, as 42 percent of financially distressed boomers have no plan in place to pay off their debt, and increase from the previous year.
Participation rates in workplace retirement plans was high across all age groups, as even 73 percent of workers under age 30 report being enrolled in a plan; 91 percent of pre-retirees participate in their workplace plan.
Despite high rates of enrollment, financial planners and participants sited insufficient retirement savings as the top financial vulnerability for all age groups.
5 Trends Driving Change in Health Care
Original post benefitspro.com
All around the country, brokers ask where the industry is going.
They want to know if other states are seeing the same changes they are; and, of course, they want to know about the great solutions that are popping up elsewhere. We feel the sands shifting, and are looking for solid footing.
Here are five trends that I believe will drive much of the industry change in the future:
1. No end in sight for medical cost increases
Is this worthy of being prediction number one? Well, it's the driver of most of the other trends, so it's appropriate. While the good news is that the percentage increase is less than it was 10 years ago, it's still many times the rate of inflation. And the “compounding interest” plays out every week with American families
- 2016 individual rate increases averaged 10 percent over 2015.
- 81 percent of employers will raise out-of-pocket costs within the next couple of years.
2. Carriers consolidate
The power is concentrating into fewer places. While we’ve seen some hospital plans develop or merge with regional health plans, the real news is the shrinkage.
- The five largest health insurance companies are reducing to three. Aetna (#3) buys Humana (#5), and Anthem (#2) absorbs Cigna (#4).
- Assurant sold off their medical insurance business last year.
- 22 of 23 PPACA-created co-ops lost money, and half closed. So that didn't create real alternatives.
3. Less plan options
As plan costs rise, increased mandates and compliance rules push off opportunities for innovative approaches to plan design. We keep hoping to find them as we scout around the U.S., but too often, we see signs of less medical plan options. For example:
- In Texas, a state that doesn't exactly embrace HMOs, BCBS of TX dropped all individual PPOs and moved everyone to their HMO.
- In Alaska, Moda Health's retreat from the market leaves only one individual medical plan serving the whole state.
- In a kind-of-related turn, many carriers (such as UnitedHealthcare, Humana, Cigna, and Oscar) now limit which plans they will pay brokers to sell. This is another way to drive members into specific plan designs.
4. Shrinking access to physicians
Driven by rate increases, a common carrier response is to reduce the size of the physician network. By driving the same number of members to a much smaller number of physicians and hospitals, the carrier can negotiate much better rates. Back in the 1990s, this was common. Now, we see this is a growing trend in about half the states. Another side of the access issue is that there just won't be enough doctors:
- The Association of American Medical Colleges latest survey reveals that by 2025, the U.S. will be short 46,000-90,000 physicians. And nothing is being done to increase the number of medical school graduates.
5. Pharmacy cost increases skyrocket — again
Prior to 2010, the pharmaceutical industry was the whipping-boy for trend increases. Have you noticed the silence on this topic for the past few years? Driven by major drugs moving to generics, Rx spending increases were low in recent years.
However, there are no more good trends in drugs turning generic on the horizon. And all we see on the horizon are amazingly expensive “specialty drugs.” It's what has driven prices to rise in the past year or so. And there's no end in sight for this trend. One VP of pharmacy for a major carrier predicted, “By 2025, up to 40 percent of the medical plan cost will be drugs.”
So where does this leave us as an industry? If these are the trends, then how should we respond? What solutions should carriers develop? What strategies can be used to best round out future plan designs?
5 things to know about the DOL fiduciary rule
Original post benefitspro.com
Tomorrow marks the last day the White House’s Office of Management and Budget will accept meetings with industry stakeholders hoping to influence the finalization of the Department of Labor’s fiduciary rule.
1. When will the DOL fiduciary rule be finalized?
That means a final rule could emerge as early as next week, but more likely by the end of the month, according to Brad Campbell, an ERISA attorney with Drinker Biddle.
Campbell and Fred Reish, who chairs Drinker Biddle’s ERISA team, addressed a conference call on the DOL rule’s potential impact.
Nearly 1,000 stakeholders participated, testament to the wide-ranging impact the rule is expected to have on advisors and service providers to workplace retirement plans and individual retirement accounts.
2. Will the DOL rule be stopped?
Several legislative efforts that would delay or defund the rule’s implementation, as well as strategies to address the rule through the appropriations process or the Congressional Review Act, are “real and substantive,” said Campbell, but stand little chance of blocking implementation of the rule.
“The likelihood that Congress can stop DOL is low,” said Campbell.
He expects more Democrats to find the rule to be problematic once it is finalized, but not enough to create the two-thirds majority needed to override a veto from President Obama, which would be all but guaranteed of any legislation Congress passes.
3. When would compliance be expected?
Campbell also said he expects the Obama Administration to waste little time making industry comply with the new rule. An end-of-year compliance date should be expected, he said.
“Obama is going to want to have a deadline in place before he leaves. That will make it much harder for the next administration to undue” the rule, said Bradford.
4. Will others try to block the rule?
While Congressional efforts to block the rule will likely prove impotent, Campbell said private lawsuits seeking to block the rule’s implementation are “a very real possibility.”
“DOL has done some things I think they lack the authority to do,” explained Campbell, who referenced a recent majority report from the Senate Committee on Homeland Security and Governmental Affairs.
That report alleged the Obama Administration was “predetermined to regulate the industry” and sought economic evidence to “justify its preferred action” in directing the DOL to write a rule that would expand the definition of fiduciary to include nearly all advisors to 401(k) plans and IRAs.
The report also claims DOL willfully ignored recommendations from the Securities and Exchange Commission, the Treasury Department and the OMB as it crafted its proposed rule.
Campbell called those arguments and others enumerated in the Committee’s report “legitimate.”
If lawsuits from stakeholders do emerge, courts may delay implementation of the rule as claims are litigated, but Campbell seemed to dissuade stakeholders from holding out too much hope for that possibility.
“No one can predict where the courts will go,” he said.
5. What will the fiduciary rule’s impact be?
Fully preparing for the rule’s impact is of course impossible before it is finalized.
Nonetheless, Campbell and Reish itemized the ways a final rule is likely to impact industry. They are hoping regulators address several vague areas of the proposal in the final weeks of the rulemaking process.
Still unknown is whether the rule will provide a grandfather provision for tens of millions of IRA accounts already in existence.
Also at question is the proposal’s education carve-out, which could greatly impact how service providers’ call centers interact with plan participants, and whether including specific funds in asset allocation models would rise to the level of fiduciary advice.
Campbell said he expects the DOL to finalize an education carve-out that is a bit more forgiving than what was initially proposed. He expects a final rule will allow specific investments to be mentioned, so long as a range of comparable options are offered as well.
There also is the question of whether or not 401(k) and IRA platform providers will be allowed to offer access to 3(21) and 3(38) fiduciaries, and whether or not doing so would be a fiduciary action.
But the biggest questions impacting a final rule’s ultimate impact relates to the proposal’s Best Interest Contract Exemption, said both Campbell and Reish.
How those exemptions are ultimately finalized will shape the IRA market and how providers and advisors recommend rollovers from 401(k) plans.
The attorneys said they expect a final rule to consider rollover recommendations a fiduciary act.
One concern for advisors will be when they need an exemption to advise on a rollover.
If general education on rollovers is offered, without advice, one natural consequence is that investors will ask advisors what they should do, said the attorneys.
“Is no advice better than so-called conflicted advice?” asked Reish rhetorically. “Prudent advice can still be prohibited” under the rule’s proposal, he said.
That fundamental question is likely to make whatever rule that emerges “extraordinarily disruptive” to the IRA market, the attorneys said.
CMS Issues 2017 Benefit and Payment Parameters Rule, Letter to Issuers and FAQ
Original post healthaffairs.org
On February 29, 2016, the Department of Health and Human Services released its final 2017 Benefit and Payment Parameters Rule (with fact sheet) and final 2017 Letter to Issuers in the Federally Facilitated Marketplaces (FFMs). It also released a bulletin on rate filings for individual and small group non-grandfathered plans during 2016, a frequently asked questions documenton the 2017 moratorium on the health insurance provider fee recently adopted by Congress, and a bulletin announcing that CMS intends to allow transitional (grandmothered) policies to continue (if states permit it) through December 31, 2017, rather than requiring them to terminate by October 1, 2017, as earlier announced.
The final payment rule and letter include most of the provisions proposed earlier, but differ in important respects.Here are a few headlines, focusing on issues of particular interest to health insurance consumers.
Standardized Plans
To begin, the final rule and letter adopt with a few changes proposals regarding standardized plans. Beginning in 2017, qualified health plan insurers would have the option of offering six standardized plans: a bronze, a gold, and a standard silver, as well as three silver plan options, at the 73 percent, 87 percent, and 94 percent actuarial-value levels, for individuals eligible for cost sharing reduction payments. The plans would have
- standard deductibles (ranging from $6,650 for the bronze plan to $3,500 for the standard silver to $250 for the 94 percent silver cost-sharing variation),
- four-tier drug formularies,
- only one in-network provider tier,
- deductible-free services (for the silver level plan including urgent care, primary care visits, specialist visits, and drugs),
- and a preference for copayments over coinsurance.
Insurers will not be required to offer standardized plans and could offer non-standardized plans (as long as they met meaningful difference standards), but standardized plans will be displayed in the marketplaces a manner that will make them easy for consumers to find.
Network Adequacy Requirements
The final rule and letter adopt some, but not all of the network adequacy requirements that were proposed, and delay some until 2018. The NPRM payment rule would have required states to adopt time and distance network adequacy standards for 2017 and imposed a federal default time and distance standard in states that failed to do so. The final rule backs off this requirement but provides that the FFM will itself generally apply quantitative time and distance standards in determining network adequacy for qualified health plans.
Provider Termination Notice
The final rule requires that health plans give patients 30 days notice when terminating a provider and continue to offer coverage for up to 90 days for a patient in active treatment by a provider who is terminated without cause. The insurer would only have to pay network rates to a provider for continuation coverage and the provider could balance bill. CMS is proceeding with its proposal to label health plans as to their relative network breadth on HealthCare.gov.
Out-Of-Network Bills At In-Network Facilities
CMS is not finalizing until 2018 a requirement the insurers apply to the in-network cost sharing limit the cost of services provided by out-of-network providers at an in-network facility; the agency is also weakening this already weak requirement. As finalized, the requirement only applies to ancillary providers, such as anesthesiologists or radiologists; can be avoided by giving notice (including form notice) 48 hours ahead of time or at the time of prior authorization that treatment might be received from out-of-network providers; and does not apply to balance bills as such where the provider bills for the difference between its charge and the network payment rate.
Open Enrollment Period And Procedures
Open enrollment for 2017 and 2018 will last from November 1 until January 31, as was true this year, but in future years, open enrollment will run from November 1 to December 15, to align enrollment with the calendar year. CMS is not finalizing until 2018 a proposal to allow applicants to remain on a web broker’s or insurer’s non-FFM website to complete a Marketplace applicant and enroll in coverage. Until then, web brokers and insurers will have to use the current direct enrollment process.
The rule changes the reenrollment hierarchy, requiring marketplaces to prioritize reenrollment in silver plans and allowing marketplaces to enroll consumers into plans offered by other insurers if their insurer does not have a plan available for reenrollment through the marketplace. Other proposals to change the reenrollment process were not adopted.
FFM User Fees In State Marketplaces
The final rule and letter finalize the status of state-based marketplaces using the federal enrollment platform, which this year included Hawaii, Oregon, Nevada, and New Mexico. In future years insurers in these states will pay a FFM user fee of 3 percent, but for 2017 the user fee will be 1.5 percent. The standard user fee for other FFM states will be 3.5 percent again for 2017.
Navigators In The FFMs
The final rule requires navigators in FFMs as of 2018 to provide consumers with post-enrollment assistance, including assistance with filing eligibility appeals (though not representing the consumer in the appeal), filing for shared responsibility exemptions, providing basic information regarding the reconciliation of premium tax credits, and understanding basic concepts related to using health coverage. Navigators will also be required to provide targeted assistance to vulnerable or underserved populations.
“Vertical Choice” In The FF-SHOPs
The final rule allows FF-SHOPs to offer a “vertical choice” option, under which employers could allow their employees to choose any plan at any actuarial level offered by a single carrier. This is in addition to the options currently available where employers can offer a single plan or any plans offered by an insurer at a single level. States could recommend against the FF-SHOP offering vertical choice in their states and states with state-based marketplaces using the FFM could opt out of making vertical choice available.
Fraud Prevention In The Medical Loss Ratio Calculation
CMS decided not to allow insurers to count fraud prevention expenses in the numerator in calculating their medical loss ratios, as it had suggested it might in the NPRM.
Other Topics
The insurer fee FAQ clarifies that insurers will not be charged the insurer fee for the 2017 fee year (which would have based the fee on 2016 data). Insurers are expected to adjust their premiums downward to account for the fact that they will not owe the fee.
CMS is allowing states to extend transitional plans, which antedate 2014 and do not have to comply with the 2014 ACA insurance reforms through the end of 2017. Earlier guidance had allowed insurers to renew transitional plans ending before October 1, 2017. CMS concluded that it would be better to allow people in transitional plans to transition into ACA compliant plans during the 2018 open enrollment period rather than having them start a new ACA compliant plan in October 2017 that would only last for three months, and then have to restart a new deductible on January 1, 2018.
There is much more in the rule and letter. The rule is well over 500 pages long, the letter almost 100. Watch for further installments over the next couple of days.
Cybersecurity Should Be on Plan Sponsors’ Radar
Original post benefitspro.com
Cyber threats and attacks are so widespread that retirement plan sponsors are being warned to develop a cyber risk management strategy rather than a cyber risk elimination strategy.
That’s according to law firm Pillsbury Winthrop Shaw Pittman LLP, which said in an advisory that among other concerns, sponsors should be prepared to evaluate their third-party service providers’ cybersecurity programs and ensuring that the plans themselves have mitigated risks from losses in case of a cyberattack.
It shouldn’t come as a big surprise to anyone, considering that there’s a $5 trillion 401(k) market just sitting there waiting to be ravaged by hackers.
Considering that account holders often don’t check their accounts often enough to catch hacking attempts, and that the advisors and plan providers hold another wealth of information (pun intended) on those account holders, the retirement plan market is ripe for the plucking.
In its first of a series of advisories on cybersecurity issues regarding retirement plans, the law firm said that an effective cyber risk management strategy would include thorough due diligence by sponsors of TPAs and vendors; periodic implementation and review of contractual protections and insurance requirements in arrangements with TPAs; periodic monitoring of TPAs’ cybersecurity compliance and related risks; and consideration of whether to utilize the SAFETY Act, a liability management statute managed by the Department of Homeland Security, and purchase cyber and privacy insurance.
According to the brief, “Retirement plan sponsors and administrators could utilize the SAFETY Act in one of two ways: (1) by having their internal cybersecurity plans and policies SAFETY Act approved, thereby significantly limiting the possible scope of litigation claims they would face after a cyberattack; or (2) by requiring TPAs to hold SAFETY Act protections, as that would allow retirement plan sponsors and administrators to be dismissed from a broad array of claims alleging negligence or poor performance attributed to the third-party security products and services.”