The Silver Lining of 401(k) Fee Disclosures
By Jonathan Anderson
Source: benefitspro.com
In all of the recent – and perhaps herculean - efforts to develop and distribute fee disclosures, a proverbial “silver lining” actually exists.
Service providers have spent much time, effort, and expense (sometimes great) in complying with the Department of Labor’s service provider fee disclosures, effective July 1, 2012.
I also realize that service providers and employers, now focused on providing participants with the participant fee disclosures, generally effective August 30, 2012, are expending similar time, effort, and money it took for the service provider disclosures.
I further recognize the disclosures contain some additional fiduciary obligations that could be challenging (e.g. reporting to the DOL any service providers with deficient disclosures; possibly being penalized and/or sued for breaches of fiduciary duty; et cetera).
However, there is a silver lining surrounding the valuable and critical benefits resulting from the disclosures.
Service Provider Disclosures:
One of the first benefits is that plan fiduciaries now have a more compact and precise tool to help determine the actual services provided by a vendor, and the reasonableness of the fees for such, to a plan.
Since determining the reasonableness of the services and fees under a service provider arrangement has always been a requirement of the fiduciaries (to avoid a prohibited transaction), the disclosures should simplify what had been a complex process for most fiduciaries. For other fiduciaries, perhaps this will be the first time a formal determination of an arrangement’s reasonableness has actually been made.
With the new disclosure, the determination process has been made easier for the plan fiduciaries, and can allow them to make more informed decisions.
The same benefit applies with respect to documenting the process of determining of an arrangement’s reasonableness. By having a disclosure describing and summarizing the services, fees, and the parties providing the services and receiving the fees, the fiduciaries’ documentation process has been simplified. In addition, documenting the process could aid the plan sponsor/plan fiduciaries defend any legal claim that the services and fees were not reasonable.
Another benefit is that the disclosures allow fiduciaries to use more of an “apples-to-apples” comparison of one service provider’s services and fees to another service provider’s services and fees. Comparisons may be used to further justify staying with the current service provider, or to explore whether switching to a different provider might be better.
Yet another benefit is the disclosures allow fiduciaries to help identify whether any changes to the current arrangement should be explored and/or made. For instance, after reviewing the disclosures made about the investment alternatives in the required summary chart format, perhaps the plan fiduciaries may decide to add or modify the investment alternatives from which a participant may choose to invest his/her account balances.
Pay or play? A strategic HR response to PPACA
By Timothy Wojcik
Source: eba.benefitnews.com
With the recent Supreme Court ruling now finalized and the minimum essential health insurance provisions in place, companies have begun to ask us “What’s next?” or “What will the financial impact be for our company in 2014?” My belief is that by taking a proactive approach to the individual mandate and understanding the impact on your company’s financials, you will be able to make that critical decision whether to continue offering a group health care plan or allow employees to elect coverage through the state mandated exchanges.
Based on external research, a recent study by Deloitte has found that approximately one in ten employers in the U.S. intend to “Pay” the penalty imposed on employers for opting out of group health coverage. This number, however, does not reflect an additional 10% of employers who weren’t sure if they would continue coverage. An overarching theme heard from our clients is that the benefits program offered today is instrumental in attracting, retaining, and engaging employees.
Ultimately, the decision to Pay or Play is a strategic HR decision which will not only impact the company’s fixed costs, but also the level of engagement and retention within the company. A thorough analysis delicately weighing the financial and non-financial factors must occur to ensure that the decision falls in line with the company’s overall business and HR strategy.
Administration Launches New Effort Against Healthcare Fraud
By Elise Viebeck
Source: thehill.com
The Obama administration announced a new plan to crack down on healthcare fraud, which costs taxpayers and industry tens of billions of dollars per year.
Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius said the new effort will cut down on illicit healthcare billings by coordinating public and private fraud-fighting.
Health insurers have been at odds with the administration over parts of the Affordable Care Act, but several have signed on to the new effort, including WellPoint, UnitedHealth Group and the industry's main lobby, America's Health Insurance Plans (AHIP).
AHIP President and CEO Karen Ignagni called the partnership a "major step forward in the fight against fraud and abuse."
"By sharing data, information, and best practices across all payers," she said in a statement, "this partnership will ... provide a powerful deterrent to would-be perpetrators looking to prey on patients and steal money from taxpayers."
Details of the expected collaborations were not released, but the announcement described how stakeholders might curb fraud by sharing information on specific schemes.
Better coordination could avert the payment of an illicit claim billed to multiple insurers, for example.
"Bringing additional healthcare industry leaders and experts into this work will allow us to act more quickly and effectively in identifying and stopping fraud schemes," Holder said in a statement.
He praised the Obama administration's efforts on healthcare fraud, which have recovered $10.7 billion over the last three years, according to the federal Health department.
Sebelius said the healthcare law has made better tools available to combat fraud, such as tougher sentences for criminals.
"Thanks to this initiative today and the anti-fraud tools that were made available by the health care law, we are working to stamp out these crimes and abuse in our healthcare system," she said in a statement.
"This partnership puts criminals on notice that we will find them and stop them before they steal healthcare dollars."
Fraud in Medicare costs about $60 billion annually, according to estimates.
Health Care Law to Cut Deficit, Says Budget Office
Copyright 2012 ProQuest Information and Learning
All Rights Reserved
Copyright 2012 Morning Sentinel
Morning Sentinel (Waterville, Maine)
BY RICARDO ALONSO-ZALDIVAR AND ANDREW TAYLOR
Associated Press
WASHINGTON -- President Barack Obama's health care overhaul will shrink rather than increase the nation's huge federal deficits over the next decade, Congress' nonpartisan budget scorekeepers said Tuesday, supporting Obama's contention in a major election-year dispute with Republicans.
About 3 million fewer uninsured people will gain health coverage because of last month's Supreme Court ruling granting states more leeway, and that will cut the federal costs by $84 billion, the Congressional Budget Office said in the biggest changes from earlier estimates.
Republicans have insisted that Obamacare will actually raise deficits -- by "trillions," according to presidential candidate Mitt Romney. But that's not so, the budget office said.
The office gave no updated estimate for total deficit reductions from the law, approved by Congress and signed by Obama in 2010. But it did estimate that Republican legislation to repeal the overhaul -- passed recently by the House -- would itself boost the deficit by $109 billion from 2013 to 2022.
"Repealing the (health care law) will lead to an increase in budget deficits over the coming decade, though a smaller one than previously reported," budget office director Douglas Elmendorf said in a letter to House Speaker John Boehner, R-Ohio.
The law's mix of spending cuts and tax increases would more than offset new spending to cover uninsured people, Elmendorf explained.
Tuesday's budget projections were the first since the Supreme Court upheld most of the law last month but gave states the option of rejecting a planned expansion of Medicaid for their low-income residents. As a consequence, the budget office said the law will cover fewer uninsured people.
Thirty million uninsured people will be covered by 2022, or about 3 million fewer than projected this spring before the court ruling, the report said.
As a result, taxpayers will save about $84 billion from 2012 to 2022. That brings the total cost of expanding coverage down to $1.2 trillion, from about $1.3 trillion in the previous estimate.
The Congressional Budget Office has consistently projected that Obama's overhaul will reduce the deficit, although previous estimates aren't strictly comparable with Tuesday's report because of changes in the law and other factors.
At the time it was approved in 2010, CBO estimated the law would reduce the deficit by $143 billion from 2010 to 2019. And CBO estimated that last year's Republican repeal legislation would increase deficits by $210 billion from 2010 to 2021.
That may sound like a lot of money, but it's actually a hair-thin margin at a time when federal deficits are expected to average around $1 trillion a year for the foreseeable future.
When the law is fully in effect, 92 percent of citizens and legal residents are estimated to have coverage, as compared to 81 percent now.
Democrats hailed Tuesday's estimates as vindication for the president. "This confirms what we've been saying all along: theAffordable Care Act saves lots of money," said Senate Majority Leader Harry Reid, D-Nev.
Actually, the government will spend more. It just won't go onto the national credit card because the health care law will be paid for with a combination of spending cuts and tax increases.
GOP leaders sought to shift attention from claims about the deficit and focused instead on the additional spending. "What we know from today's CBO report ... is that the new health care law is dramatically increasing health care spending and costs," said Senate Republican leader Mitch McConnell of Kentucky.
Republicans said they remain unswervingly committed to repealing what they dismiss as Obamacare. When combined with other budget-cutting measures, GOP leaders say that repeal will ultimately reduce deficits. Romney says if elected he will begin to dismantle the law his first day in office.
Medicaid has been one big question hanging over the future of Obama's law since the Supreme Court ruled.
Some GOP-led states, such as Texas and Florida, say they will not go forward with the expansion. Others are uncommitted, awaiting the voters' verdict on Obama in November.
Although the federal government would bear all of the initial cost of that expansion, many states would have to open their Medicaid programs to low-income childless adults for the first time.
CBO analysts did not try to predict which specific states would jump in and which would turn down the Medicaid expansion. Instead, they assumed that many states would eventually cut deals with the federal government to expand their programs to some degree.
As a result, the budget office estimates that more than 80 percent of the low-income uninsured people eligible under the law live in states that partially or fully expand their programs.
The big coverage expansion under the law doesn't start until 2014, with middle-class uninsured people signing up for subsidized private plans and more low-income people picked up through Medicaid.
Don’t Get Hit With Fines Under Health Care Reform
By Bonnie Lee
Source: smallbusiness.foxbusiness.com
With more than 500 provisions, the Patient Protection and Affordable Care Act contains hefty tax implications for small business owners.
Of the 500 provisions in health-care reform, more than 40 of these provisions affect the Internal Revenue Code, including incentives and tax breaks to individuals and small businesses to offset health-care expenses.
Some of the provisions also impose penalties for individuals and businesses that do not obtain health-care coverage for themselves or their employees. According to The Treasury Inspector General of Tax Administration which performed an audit of this law, “Revenue provisions contained in the legislation are designed to generate $438 billion to help pay for the overall cost of health care reform. Additionally, new reporting requirements have been established.”
One overlooked section in the reform fines both small businesses and corporations up to $500,000 for being discriminatory with their health insurance.
The Affordable Care Act requires businesses that offer health insurance to provide it to at least 70% of the employees. It also requires that company executives not discriminate by having better insurance plans for some of their employees. The IRS penalty for companies with 50 or more employees that are found to be discriminatory may be fined as much as $100 per day per person or 10% of the annual premiums whichever is less--up to a maximum of $500,000.
Brett Goldstein, director of retirement planning at American Investment Planners in Jericho, NY states, “Many businesses have health insurance or better benefits for owners and top employees. However under The Affordable Care Act, offering health insurance or different insurance to just a few key employees will be considered discriminatory.”
What constitutes discrimination under The Affordable Care Act? Goldstein says that offering the top employees health insurance with shorter waiting periods or lower premiums could be discriminatory and lead to fines.
Differences in health plans can exist between different classes of employees. For example, a company can have different benefits for salaried employees vs. hourly employees, but not for “executives” vs. other employees.
The IRS temporarily suspended the health insurance non-discrimination rules in 2010. However now that the Supreme Court has upheld the law, the IRS will now have to come up with specific rules regarding health insurance non-discrimination.
“Hopefully when the IRS issues regulations on health insurance non-discrimination they will relax some of the rules in the Affordable Care Act, such as the fines,” says Goldstein. “In the meantime, every business needs to be reviewing their health insurance to see if they are discriminating in favor of the owners and top paid employees.”
And it isn’t just businesses that will be penalized. According to the TIGTA audit report, an annual excise tax will be imposed on health insurance providers whose written net premiums exceed $25 million. It’s based on market share, with the total industry fee starting at $8 billion in 2014 and rising to $14.3 billion in 2018 and an indexed amount after that. And if an insurance provider fails to file their premiums report, they will be assessed a penalty of $10,000 plus the lesser of $1,000 times the number of days late or the amount of the tax imposed for which the report was required. This tax does not apply to employers who self-insure their employees or certain government entities. This becomes effective after December 31, 2013. And of course, the American way is to pass on any tax increases as well as additional administrative costs to customers.
HEALTH CARE LAW SAVES $3.9 BILLION ON PRESCRIPTION DRUGS FOR PEOPLE WITH MEDICARE IN 2012 ALONE
States News Service
Source: Lexis Nexis
BALTIMORE, MD
The following information was released by the Centers for Medicare & Medicaid Services:
As a result of the Affordable Care Act, over 5.2 million seniors and people with disabilities have saved over $3.9 billion on prescription drugs since the law was enacted. The Centers for Medicare and Medicaid Services (CMS) also released data today showing that in the first half of 2012, over 1 million people with Medicare saved a total of $687 million on prescription drugs in donut hole coverage gap for an average of $629 in savings this year.
Millions of people with Medicare have been paying less for prescription drugs thanks to the health care law, said CMS Acting Administrator Marilyn Tavenner. Seniors and people with disabilities have already saved close to $4 billion. In 2020, the donut hole will be closed thanks to the Affordable Care Act.
These savings are automatically applied to prescription drugs that people with Medicare purchase, after they hit the Medicare Part D prescription drug coverage gap or donut hole. Since the law was enacted, seniors and people with disabilities have had several opportunities to save on prescription drugs:
In 2010, people with Medicare who hit the donut hole received a one-time $250 rebate. These rebates totaled $946 million for 2010;
In 2011, people with Medicare began receiving a 50 percent discount on covered brand name drugs and 7 percent coverage of generic drugs in the donut hole. Last year, these discounts totaled over $2.3 billion in savings;
This year, Medicare coverage for generic drugs in the coverage gap has risen to 14 percent. For the first six months of the year, people with Medicare have saved $687 million.
Coverage for both brand name and generic drugs in the gap will continue to increase over time until 2020, when the coverage gap will be closed.
Employers Lack Confidence in PPACA Understanding
By Rebecca Moore
Source: PLANSPONSOR
Just 40 percent of HR decision makers from large organizations are very confident about their understanding of employer requirements under the Patient Protection and Affordable Care Act (PPACA), according to an ADP Research Institute survey.
Even fewer respondents in small companies (20 percent) and midsized companies (17 percent) expressed that same level of confidence.
3 Simple Ways to Make People Happy at Work
By Margaret Heffernan
Source: inc.com
Learn these strategies to make your employees happy, and extravagantly execute them. You'll create a better business.
Most CEOs know that, if their workers are happy, they're also more productive. But how to make them happy is the challenge. Many take the goal too personally and try to build staff contentment through personal relationships. They get exhausted and find the strategy simply won't scale.
So what can you realistically pull off to make people happy at work?
Professional growth
People want to stretch, to develop their natural talents, feel their life has a narrative and is going somewhere. When they feel that they are growing, they may be exhausted but they're also inspired, energetic, and willing to take on a great deal. (That's one reason why investing in people can deliver a higher return that investing in new technology.) Anyone who reports to you (and anyone who reports to them) should have a professional development plan. That will keep everybody engaged, busy, and--eventually--happy.
Strong community
Everybody wants to be proud of where they work, to feel that they are investing the most precious thing they have--time--in something that matters. For some companies, the mission or the products are enough. If you make things that cure disease, create cleaner air, save carbon emissions, or improve life in any way, your business has an intrinsic sense of purpose which is probably what drew people to it in the first place. If you make ball bearings, knowledge-management software, light switches, or other kinds of widgets, you may find it tougher to demonstrate how you make the world a better place. Superficial social-responsibility projects won't fill this gap for you. You need to create direct links between the success of the business and the community you serve. These need to involve the entire work force and should be active, public, visible, and long lasting. Many companies get their staff to choose the causes or charities they support. The more they're engaged in these commitments, the more meaningful they will be to them--and your company community.
Fair treatment
"Everybody here is somebody." That's how one call-center rep once explained to me why he loved the company where he worked. The job wasn't thrilling, the pay wasn't great, but every single person was treated with love and respect. Just walking through the door, he said, made you glad to come to work. When people got sick, co-workers worried. When someone was due to retire, she most likely came back to work part time, just for the camaraderie. Sooner or later, everyone in a company like this talks about it as being like "family." The CEO knows everyone's name--even the names of everyone's kids and pets. This kind of fair--and kind--treatment also means startlingly low turnover rates, which also saves money. But it's not really about the money.
The very best companies I've studied and written about honor these principles and enact them lavishly. They don't pay lip service, and they don't do the bare minimum; they go overboard. Their CEOs do so because they know the secret of leadership: Look after the people, and the people look after the business.
Worries Grow as Health Care Companies Send Jobs Overseas
Don Lee, Tribune Washington Bureau
Chattanooga Times Free Press (Tennessee)
WASHINGTON -- After years of shipping data-processing, accounting and other back-office work abroad, some health care companies are starting to shift clinical services and decision-making on medical care overseas, primarily to India and the Philippines.
Some of the jobs being sent abroad include so-called pre-service nursing, where nurses at insurance companies, for example, help assess patient needs and determine treatment methods.
Outsourcing such tasks goes beyond earlier steps by health care companies to farm out reading of X-rays and other diagnostic tests to health professionals overseas. Those previous efforts were often done out of necessity, to meet overnight demands, for instance.
But the latest outsourcing, which has contributed to the loss of hundreds of domestic health jobs, is done for financial reasons. And the outsourcing of nursing functions, in particular, may be the most novel - and possibly the most risky - of the jobs being shifted.
At the forefront of the trend is WellPoint Inc., one of the nation's largest health insurers and owner of Anthem Blue Cross, California's biggest for-profit medical insurer.
In 2010, WellPoint formed a separate business unit, Radiant Services, aimed at advancing outsourcing and other cost-saving strategies. WellPoint has eliminated hundreds of jobs in the U.S. over the last 18 months as it has moved jobs overseas, a company spokeswoman acknowledged.
The spokeswoman, Kristin Binns, said WellPoint's shifting of clinical jobs overseas was a small part of the outsourcing and being done through Radiant because it has the technical expertise and can ensure compliance with laws.
Nursing organizations, however, were cautious.
"It's obviously a very disturbing trend," said Chuck Idelson, a spokesman for the California Nurses Assn. "There are serious questions if you're talking about utilization reviews ... and making recommendations on procedures."
Nursing experts said there also may be licensing issues as states generally require certification for those practicing and dispensing health information.
Current and former Radiant executives declined to comment or weren't available.
It's not clear how many other U.S. health care companies have contracted with Radiant or other outsourcing specialists, but industry experts said companies were increasingly looking at more healthcare tasks that could be outsourced globally as they face greater cost pressures and sweeping changes in how they do business.
Aetna Inc. has an arrangement with EXL Service, a U.S.-based company with operations in Manila, to provide "targeted care-management support," spokeswoman Cynthia Michener said.
Health Net Inc., which is laying off dozens of information technology and accounting workers whose jobs are being sent to India, said its outsourcing has generally been confined to administrative and IT functions. UnitedHealth Group, the nation's largest health insurer, didn't respond to inquiries.
Outsourcing jobs out of the country has become a hot issue in the presidential campaign: President Barack Obama is pounding Republican challenger Mitt Romney for his private equity company's involvement with companies that sent jobs abroad.
Although such outsourcing has been going on for years, American manufacturers in recent years have brought some jobs back to the U.S. as labor costs have risen in China and elsewhere.
Some experts argued that sending jobs abroad could help U.S. companies by enabling them to tap global talent and efficiencies, making them more profitable. When U.S. companies are stronger, the thinking goes, it creates more opportunities for Americanworkers. Also, shifting operations to lower-wage countries can help consumers by holding down prices.
Outsourcing jobs to places such as the Philippines can save U.S. health care companies 30 percent in labor costs, according to experts. But the practice remains controversial, especially with the U.S. unemployment rate hovering above 8 percent.
Patient advocates worry about crucial decisions involving a patient's care being in the hands of foreign insurance adjusters. Analysts said there was another concern as well: patient privacy.
Even something as straightforward as medical transcription can raise questions, said Uwe Reinhardt, a healthcare economist at Princeton University. Over the last year, Iowa Health System and hospitals in Utah and Washington state have joined other medical centers that have outsourced the transcribing of doctors' notes and other records.
"Suppose I'm an AIDS patient," Reinhardt said. "That person in India would know - and (the information) could be valuable to someone.... For the U.S., there's nothing more personal than health care."
Dr. Kaveh Safavi, head of the North American health practice for Accenture, a major consulting and outsourcing company that has partnered with WellPoint's Radiant, said nearly all countries have laws for protecting patient privacy.
And to safeguard patients' records, he said, heath care companies store and maintain their records locally.
As for outsourcing services that are more clinical in nature, he said, "People are looking at all the tasks that can safely and responsibly be moved. It's still an emerging market. We're still trying to understand the market's tolerance for it."
In general, hospitals are moving more slowly than health insurers to send jobs overseas. But with financial pressures intensifying and the uptake of electronic record-keeping accelerating, analysts and industry people see more consolidation and outsourcing ahead.
"When you have people's medical, billing and other records kept electronically, then it opens it up to establishing a call center virtually anywhere," said Steve Trossman, a Los Angeles spokesman for the Service Employees International Union, which represents hospital workers. "There is no longer a reason for it to be physically in the same place as the paper records."
Moreover, the health care reform law could prod insurers to move more jobs to cheaper-wage countries. The new law requires companies to spend 80 percent to 85 percent of premiums on medical care, limiting the amount available for administrative expenses.
Few have been as aggressive as WellPoint, which made a profit of $2.65 billion last year on revenue of $60.7 billion. WellPoint's total employment at the end of last year was 37,700, down from 40,500 two years earlier.
In one of its recent efforts, WellPoint laid off pre-service nurses in Colorado and Nevada so the work could be done in Manila, according to a Labor Department filing by a WellPoint human resource manager in Denver. WellPoint spokeswoman Binns said none of the decisions that involve denial of procedures or treatment for patients is made overseas.
(EDITORS: STORY CAN END HERE)
Overall, Binns said, fewer than 2.5 percent of the 37,000 employees, or at most 925 workers, had lost jobs in the last 18 months as a result of work sent overseas. Only about 50 of those positions involved clinical management of care, she said.
WellPoint's "sourcing strategies have enabled us to make our services more effective, accessible and affordable to our customers, while allowing us to expand our programs and maintain our service levels," she said.
WellPoint's offshoring covers a wide range of departments and tasks involving claims, enrollment, billing, post-service clinical claims review, utilization management and pre-service nursing, according to filings made by company managers and state government officials. Both were helping secure federal trade-assistance benefits for WellPoint workers who have lost jobs because of outsourcing or import competition.
Shannon Cunningham of Columbus, Ohio, who processed medical claims for WellPoint, was laid off last month after a colleague went to the Philippines to train people to do her job.
Cunningham, 43, said she received eight weeks of severance pay. She and others working in medical claims earned $30,000 to $40,000 a year with health benefits, she said.
"I know other countries need work," said Cunningham, a company employee for three years. But "I just felt like it wasn't fair. We're having a rough time too."
Most Employees Not Given a Choice of Health Plans
Source: PLANSPONSOR.com
Most Americans get their health insurance coverage from employment-based plans, yet most employers do not offer a choice of health plans, according to the Employee Benefit Research Institute (EBRI).
In 2011, 84% of employers with health benefits offered only one plan; 15% had two choices; and 1% offered three or more options. Large firms were more likely to offer a variety of health plans than small firms; 42% of large firms gave two or more choices, compared with 15% of smaller firms. As a result, nearly one-half (47%) of covered workers had a choice of health plans, and according to the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, 59% of adults ages 21 to 64 with employment-based health coverage had a choice of health plans.
Among individuals covered by an employment-based health plan, those in consumer-driven health plans (CDHPs) were more likely than those with traditional coverage to be given options. In 2011, 68% of CDHP enrollees had a choice of health plans, compared with 59% of individuals in traditional plans, and 48% of those with high-deductible health plans (HDHPs).
The greater variety for CDHP enrollees may be due to the fact that an increasing percentage of the CDHP population works for an employer with 500 or more employees and large employers tend to offer more benefit options, EBRI said in its July Notes.
Asked about the main reasons for enrolling in their plan, 50% of CDHP enrollees reported they chose that offering because of the lower premium, while 45% said the opportunity to save money in the account for future years was a primary concern. Among individuals with traditional health coverage, 39% cited the good network of providers and 32% reported the low out-of-pocket costs as the main reasons for enrolment.
Among individuals with a choice of plans, CDHP and HDHP enrollees were less likely than those with traditional coverage to say they were extremely or very satisfied with the quality of care received.
More information can be found in the July EBRI Notes at https://www.ebri.org.