by US Rx Care | Jan 22, 2019 | Uncategorized
As group health insurance costs continue rising every year, more employers are embracing a new plan model that aims to both cut costs and improve outcomes for patients.
This trend, known as value-based primary care, is a bit of an umbrella term for various models that involve direct financial relationships between individuals, employers, their insurers and primary care practitioners. Insurers are experimenting with different model hybrids to find better care delivery methods that reward quality outcomes and reduce costs.
This new approach was made possible by the Affordable Care Act and the Medicare Access and Child Health Plan Reauthorization Act. And as the future of the ACA remains in doubt, the enabling parts that allowed for this system of payment reform that rewards health care providers that produce better quality outcomes for lower costs will likely remain intact.
And now more health plans are adopting this model. The 2016 “Health Care Transformation Task Force Report” found that the share of its provider and health plan members’ business that used value-based payment arrangements had increased from 30% in 2014 to 41% at the end of 2015.
In a McKesson white paper, payers reported that 58% of their business has already shifted to some form of value-based reimbursement.
How does it work?
First, let’s look at what the value-based primary care model is not: it’s not a fee-for-service system, under which when doctors see a patient and deliver care, they then bill the insurer a fee that is directly tied to the service they provided.
Fee-for-service arrangements have a fee schedule that lists the usual and customary charges for thousands of different procedures. The payment amounts will vary also based on the
reimbursement rate negotiated between the insurer and health care provider.
The part of the equation that’s missing is that the there is no direct link between the payment and the outcomes of the care. The insurer does not look at if a person was cured or has recovered successfully. There is only a link between the service provided and the payment.
Many value-based models provide a payment bonus to doctors and hospitals that produce better quality outcomes, like if they have more patients who don’t relapse or who recover at a slower pace and require more doctor visits.
Providers of value-based primary care typically charge the health plan a monthly, quarterly or annual membership fee, which covers all or most primary care services, including acute and preventive care.
The main goal is to get away from the fee-for-service system which puts pressure on doctors to only provide very short primary care visits with their patients, who will often send the patient out for unnecessary high-margin services such as scans and specialists and/or write excessive prescriptions. By eliminating this billing structure, doctors are able to practice more proactive care, which can reduce or eliminate certain future health care costs.
But just because the model is patient-focused, it does not mean that costs are higher. Proponents of value-based care say the focus on patients, and focusing on preventative and forward looking care rather than reactive care, reduces overall costs, which should be reflected in premiums.
Some benefits to patients include:
- More time with their doctor
- Same-day appointments
- Short or no wait times in the office
- Better technology, e.g., e-mail, texting, video chats, and other digital-based interactions
- 24/7 coverage by a professional with access to their electronic health record
- More coordinated care.
Vale-based care also improves provider experience and professional satisfaction, which, in turn, is known to improve the quality of care.
by US Rx Care | Jan 15, 2019 | Uncategorized
In the final rules that the Centers for Medicare and Medicaid Services released for 2019, it also covered annual cost-sharing limits for group plans, rules on SHOP exchanges, and grandfathered plans, among other items we’ve covered earlier.
Here we break down some of the focuses of the 2019 rules:
Annual cost-sharing limits for group plans – The maximum annual limit on cost-sharing for 2019 will jump to $7,900 for self-only coverage and $15,800 for other than self-only coverage. That’s up from $7,350 and $14,700, respectively, for this year.
New rules for SHOP – Starting in 2019, the Small Business Health Options Program will no longer be required to provide employee eligibility determinations or appeals, premium aggregation or online enrollment. The SHOP scheme was created as a way for small employers to shop on an exchange much like individuals buying Affordable Care Act plans on marketplaces do.
SHOPs will still be required to determine employer eligibility for the SHOP and certify each qualified health plan available through the SHOP. However, enrollment will not be done online, but rather through agents and brokers who have registered with SHOP or an insurer offering a qualified health plan.
Notably, the small business health care tax credit will remain in place for eligible employers. SHOP will still have a website that includes information on the plans in all geographical areas, a premium calculator and access to customer service where SHOP personnel can answer questions.
One other item that will stay in place is the “rolling enrollment” rule that allows employers to buy SHOP coverage at any point during the year if they meet certain criteria.
The main reason for these changes is that SHOP enrollment has been well shy of expectations, so CMS is looking for ways to continue offering the administration functions required by the ACA.
That said, state-based SHOPs will still have leeway to maintain their current operations as they see fit. But for the most part, starting with the 2019 policy year, federal and state SHOPs will mainly rely on brokers and insurers to take on more of the responsibility for determining employee eligibility, conducting enrollment and collecting premiums.
Another grandfather extension – CMS has extended the transitional policy that allows states to permit insurers in small group markets to renew health insurance policies they would otherwise have to cancel because they don’t comply with parts of the ACA.
This means that states may allow insurers that have continually renewed eligible non-grandfathered individual and small group policies since Jan. 1, 2014, to again renew those policies, provided that the policies end by Dec. 31, 2019.
Health insurers that use the transitional policy will be required to send informational notices to affected individuals and employers.
by US Rx Care | Jan 8, 2019 | Uncategorized
In recent years, many companies have been dealing with rising health care costs largely by transferring more of the expense and risk on to their employees.
But some employers have found smarter, more creative ways to limit health costs without further burdening valued employees. Here are some of the best solutions:
- Pharmacy benefit managers. Pharmacy benefit managers are independent third party administrators who work with pharmacists, employers and workers to reduce costs and inefficiencies. For example, they may help workers migrate from expensive brand name drugs to equally effective generics for a fraction of the cost.
Or they may be able to migrate workers from bricks-and-mortar pharmacies to mail order. They also assist employers with contract negotiations.
- Telemedicine. Some companies are contracting with doctors to provide health services online, via a video feed. It’s no substitute for an in-person examination, but workers can get consultations and routine assessments done and get a prescription for a fraction of the cost of an in-person visit. Furthermore, the worker doesn’t have to take time off work for an appointment. It can be done from the office. A typical insurance billing for a basic medical appointment can run as high as $150. But a telemedicine visit can cost about a third of that amount, according to reporting from U.S. News.
- Wellness programs. Healthy employees cost much less than sick ones over time. Smokers and the obese generate much more frequent and higher medical claims than normal-weight employees.
Employers are fighting back by offering access to smoking cessation and weight loss programs, as well as additional programs for the management of common conditions such as high blood pressure, diabetes and asthma. About 58% of health plans nationwide offer an incentive for participating in a wellness program, according to research from CEB, the best-practice insight and technology company.
- Consumer-directed health plans. Employers are also giving employees greater control over their spending decisions. They are doing this via high-deductible health plans, which come with access to health savings accounts. These allow either an employee or an employer to contribute pre-tax dollars to an HSA. Withdrawals from an HSA to pay for qualified health care expenses are tax-free.
These plans are less expensive for employers than comparable traditional insurance plans, and can work very well for employees in good health. Some employers choose to contribute to HSAs on their workers’ behalf.
- Transparency tools. Cost-transparency tools make the cost of every medical procedure or service visible to employers and patients alike.
A claims analysis from UnitedHealthCare found that those who used the company’s transparency tools spent an average of 36% less on health services. When consumers used price-transparency tools, CEB researchers found an average saving of $173 for employees and $409 for employers per procedure.
by US Rx Care | Jan 2, 2019 | Uncategorized
Under the Affordable Care Act, group health insurance costs have been rising at a much slower rate than they had during the decade preceding its passage.
In fact, the rate of annual premium growth in the group market has hovered around 5% – more than half of what it was between 2001 and 2010. Also, health care’s share of the national economy actually fell from 17.4% in 2010 to 17.2% by 2013. However, that trend hasn’t lasted and in 2016 the share was 17.9%.
There has been a lot of debate about why rates have been increasing and some pundits say that if it were not for spiraling pharmaceutical costs, the rate of health insurance inflation would be lower.
While the drug industry would deny pharmaceutical costs are what’s driving health care cost inflation, the numbers show otherwise, according to an analysis by Modern Healthcare, an industry trade publication.
Here are the figures that drive home the point. Between 2013 and 2016, personal health care consumption rose 16.7%, according to the Centers for Medicare & Medicaid Services (CMS). This is what was driving that inflation:
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- Hospital spending: Up 15.5%
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- Professional services (mostly physician office-based care): Up 16%
- Drug spending: Up 23.9%
Source: CMS
For 2018 group health plans, the inflation components of the three main areas could not be starker:
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- Hospital costs: 6.1% (from 2017)
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- Physician costs: 4.3%
- Pharmaceuticals: 10.9%
Source: Segal Company
The situation may actually be worse than the numbers hint at. Retail drug sales don’t include the most expensive medicines – those delivered in hospital outpatient and physician offices. The CMS doesn’t track that data separately, but one can get a glimpse of what’s happening by examining the latest financial reports from major hospital systems.
Controlling drug costs
Prescription drug costs now account for about 17% of total U.S. healthcare spending and were the fastest rising component of that spending over the past year.
Drug costs have been difficult for health care providers and the insurance industry to tackle.
The pharmaceutical industry has been able to fend off government efforts to counter price hikes. It successfully lobbied Congress in 2003 to bar Medicare from negotiating prices in the new Part D program.
The industry has been aided by opposition from physician and patient advocacy groups, who fear that cost-benefit calculations will be used to cut them off from high-priced but effective medicines.
Benefits consulting firm Segal Company asked managed care organizations, health insurers, pharmacy benefit managers and third-party administrators to rank the cost-management strategies implemented by group health plans in 2017. Here are the top five:
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- Increasing financial incentives in wellness plans.
- Contracting with value-based providers.
- Intensifying pharmacy management programs– This includes negotiating better pricing for commonly used drugs.
- Using specialty pharmacy management– This focuses on controlling costs of specialty drugs, many of which cost more than an annual health premium for a year’s worth of dosing.
- Adopting high-deductible health plans.
These strategies show plan sponsors are looking to drive utilization to high-quality, low-cost providers in lieu of simply passing the costs on to their employees.
by US Rx Care | Dec 18, 2018 | Uncategorized
An investigative report by the Washington Post has uncovered an alleged cartel among generic drug manufacturers to fix the price of some 300 medications, adding new fuel to the debate about raging price increases in the pharmaceutical industry.
While a number of name-brand drug makers have been named and shamed for their massive price increases – sometimes hundreds or thousands of percent higher – the article looks at how something similar has been going on in the generic drug market.
A case that started as an antitrust lawsuit brought by two states has spurred a massive investigation into alleged price-fixing by at least 16 companies that make 300 generic drugs. Now 47 states are party to the lawsuit, seeking to recoup perhaps billions of dollars.
In addition, pharmacies and other businesses have filed their own lawsuits against the generic drug makers. One such suit documents huge price hikes – like a 3,400% increase in the price of an anti-asthma medication – and investigators believe that generic drug producers colluded to raise prices in tandem or not make their products available in some markets or through specific pharmacy chains.
The scale of the alleged collusion was summed up by Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut, whose office has taken the lead in the investigation: “This is most likely the largest cartel in the history of the United States,” he told the Washington Post.
If the allegations are true, the parties affected run the gamut from consumers, who have high copays or high deductibles for their pharmaceuticals, to hospitals and insurance companies. And many health industry observers were surprised to learn the news, considering that generics are supposed to be a safety net for patients to ensure access to quality medications at a reasonable price.
Two former executives of one generic drug maker, Heritage Pharmaceuticals, have pleaded guilty to federal criminal charges. They are now cooperating with the Justice Department.
The article describes the coziness among executives from competing generic drug makers and how they would allegedly collude to raise prices.
There has been no estimate of how much the generic drug companies allegedly overcharged over the years, but even if it’s a fraction of the annual sales of $104 billion a year, it would be substantial.
The drug makers that the Washington Post was able to reach denied the allegations.
Coordinated price hikes ‘almost routine’
The generics industry used to be highly competitive, according to the story, but over the years, things changed and suddenly allegedly “coordinated price hikes on identical generic drugs became almost routine,” the Post wrote.
The alleged price-fixing affects 300 generic drugs, according to the report. Generics account for 90% of the prescriptions written, however they only account for 23% of the total drug spend in the country, according to the Association for Accessible Medicines.
And still, the prices of on a benchmark set of older generic drugs in the Medicare prescription-drug program dropped 14% between 2010 and 2015.
But, for the 300 drugs in question, prices went up, according to the lawsuits. That’s why pharmacies have also come to the fore to sue. They were on the front lines when they started noticing marked increases of hundreds of percent in the prices of some generic medications.
If the collusion turns out to be true, it essentially reverses the possible gains when a generic drug enters the market. According to the Federal Drug Administration, prices fall up to 50% when a second generic enters the market. And once there are six or seven companies making the same generic drug, the price usually falls 75% from the original cost of the brand name pharmaceutical.
by US Rx Care | Dec 11, 2018 | Uncategorized
The IRS has been sending penalty notices to more than 30,000 businesses nationwide, advising them that they may be out of compliance with the Affordable Care Act employer mandate. The tax agency said those employers are on the hook for a total of roughly $4.3 billion in fines.
While the individual mandate has been repealed starting in 2019, the employer mandate is intact and the IRS is pursuing penalties aggressively.
Under the ACA, companies with more than 50 full-time employees are required to extend health insurance to their workers. Failure to do so can result in penalties as high as $2,000 per worker.
As the IRS steps up its efforts to pursue companies that fail to comply with the employer mandate, a report in the New York Times indicates that many of the letters that were sent out were for clerical errors that the employer can address in order to avoid the fine.
The Congressional Budget Office predicts the IRS could levy $12 billion in employer mandate violation fines in 2018.
And the IRS is just getting started, as it was delayed in enforcing the employer mandate for the first year it was in effect, 2014, because of delays in reporting and the Treasury Department clarifying the requirements.
That means the first round of penalty notices that are being sent out now are only for the 2015 tax year. Once it’s done sending those out, pundits say that the IRS will quickly start sending out penalty notifications for 2016 and 2017.
The New York Times reported that the IRS is working with some businesses that experienced technical or paperwork issues to help them avoid fines. E. Neil Trautwein, vice president at the National Retail Federation, told the newspaper that some employers are receiving notifications because they checked the wrong box on their 1094-C forms.
Employee benefits attorney John D. Arendshorst told the paper that the government has shown a willingness to reduce penalties when appropriate. He cited one case where a business with some 500 employees had been notified that it faced a $1.9 million fine, which was eventually reduced to $20,000 because the penalty had been caused by a computer error.
If you get a letter
When notifying an employer of a fine, the IRS uses Letter 226-J. The most likely cause of incorrect assessments is errors in Forms 1094-C and 1095-C.
If you receive a letter, consulting firm Towers Watson recommends that you:
- Respond within 30 days or request an extension. Unless the IRS receives a response within 30 days, the agency will assume that its facts and penalty amount are correct. Employers can request an extension by calling the phone number at the top of the Employer Shared Responsibility Payment (ESRP) Response form. The IRS typically grants these requests.
- Analyze the letter for accuracy. Review all documents you filed with the IRS and provided to employees to ensure that the information on them is correct and that they match the information in the IRS letter. The review should include the following:
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- Ensure that all employees listed in the letter as receiving a premium tax credit were common-law employees.
- Check whether any employees listed as having received a premium tax credit were enrolled in your health plan.
- Check whether you offered health coverage to employees who were not enrolled in the health plan and who received a premium tax credit.
- Verify that all employees listed as receiving a premium tax credit were full-time staff.
- Decide whether to challenge the assessment. If you feel there is a discrepancy between your numbers and those provided by the IRS, you should fill out the ESRP Response form. This filing should include a signed statement explaining the reason(s) for the disagreement and any supporting documentation.
