by US Rx Care | May 6, 2020 | Health care costs
A number of plan sponsors have made changes to their group health plans in response to the COVID-19 pandemic, such as covering testing and sometimes treatment without any cost-sharing by the plan enrollee.
But any changes that are made must be followed up by amending the plan and communicating the changes to the enrollees.
Under the Employee Retirement Income Security Act, all health plans are required to deliver a Summary Plan Description (SPD) to enrollees to inform them of the full spectrum of coverage and their rights under the plan.
Whenever a plan sponsor makes a material modification to the terms of the plan or the information required to be in an SPD, they must amend the plan and let participants know about the change through a Summary of Material Modification (SMM).
Material changes
To qualify as “material,” a change must be important to plan enrollees. Examples include adding or eliminating a benefit, changing insurance companies, or changing rules for dependent eligibility.
Plan changes related to the COVID-19 pandemic that would have to be included in the SMM and SPD could include:
- Offering continuing coverage to staff who would otherwise lose coverage due to a furlough, layoff or reduction of hours.
- Changing eligibility terms to allow workers who may not have been eligible for coverage before to secure coverage (this could include part-time workers).
- Covering a larger portion of an employee’s premium share.
- Adding an employee assistance program to provide counseling for workers who may be undergoing unusual stress.
- Adding telemedicine coverage.
- Using funds in health savings accounts (HSAs) and flexible spending accounts (FSAs) to purchase over-the-counter medications.
- Covering COVID-19 testing with no cost-sharing.
- Covering COVID-19 treatment without cost-sharing.
Some of the above changes are required by new laws and health plans must respond accordingly by changing their SMMs and SPDs. For example, the Families First Coronavirus Response Act requires that group health insurance and individual health insurance plans cover coronavirus testing with zero cost-sharing.
And the Coronavirus Aid, Recover and Economic Stabilization Act reverses an Affordable Care Act rule that barred policyholders from using funds in HSAs and FSAs to pay for over-the-counter medications.
When the plan sponsor adopts these changes, it must also amend its plan summaries.
And SMMs must be delivered to plan participants within 60 days after a change has been adopted. You can deliver the SMM by mail, e-mail or posting it on your company’s intranet site. It’s recommended at this time that you opt for e-mail delivery.
One of the issues that may come up with any changes implemented in response to the COVID-19 outbreak is that some of the changes may be temporary.
If that’s the case, the plan needs to include the termination date of any benefits that are adopted on a temporary basis.
However, if you don’t know how long the temporary benefits will be in effect, their temporary nature must be communicated in the SMM. Employers need to issue another SMM when the temporary benefit or coverage term ends.
The takeaway
This is an unusual time and unusual times call for unusual measures. It’s unusual for changes to be made to a plan in the middle of a plan year but because of the way the pandemic crash-landed, many plan sponsors have had to make changes.
That said, you should work with us and your carrier on ensuring that the amended documents are sent out to staff.
As the employer, you should be aware of all the changes that have been made in response to COVID-19 so you can discuss them with any employees that have concerns or questions.
by US Rx Care | Mar 10, 2020 | Health care costs
Employers, health insurers, regulators and hospitals are all raising concerns about the Trump administration’s rules issued last year that allow employers to fund health reimbursement arrangements (HRAs) that their workers can use to purchase health plans on the open market.
The Centers for Medicaid and Medicare Services, IRS and the Department of Labor issued the final rules in late 2019. They reverse one of the major pinch-points of the Affordable Care Act, which bars employers from paying employees to buy their own health insurance either on publicly run health insurance exchanges or on the open market.
The fine for breaching this part of the law is a hefty $36,500 annually.
The rules continue to receive pushback from small business groups, insurers, regulators and others, who say that employers who want to go this route are facing a bureaucratic nightmare.
And one of the biggest concerns is that employers will use the opportunity to move older and sicker workers from their group health plans to exchanges, in order to reduce the cost burden on their plans.
Complexity a major issue
The National Federation of Independent Business has said that small businesses that want to offer workers an HRA integrated with an individual-market health plan are facing a lot of complexity.
“NFIB recommends that your departments plan to release… a publication that explains in plain English, step-by-step, how small businesses can establish, administer, and comply with the rules,” the group wrote.
HRAs are tax-sheltered accounts funded employers that typically are offered to reimburse employees for out-of-pocket medical expenses. This rule expands how those HRAs can be used. HRAs have been tax-advantaged only if they are coupled with an ACA-compliant group health plan. They cannot be used now to pay premiums for individual-market health insurance.
Under the rule, employers could provide an HRA that is integrated with individual health insurance coverage. The rule does include provisions to prevent employers from steering workers or dependents with costly health conditions away from the employer group plan and toward individual coverage.
Employers also could offer a different type of HRA, funded up to $1,800 a year, that could be used by employees to pay premiums for short-term plans that don’t comply with ACA consumer protections.
Employers could not offer the same employees the choice of either a traditional group plan or an HRA-funded individual-market plan. But they could offer a group plan to certain classes of employees, such as full-time workers under age 25, and an HRA plan to other classes, such as part-time employees.
Fears many may be shunted from group plans
Other concerns that are being raised include those by the American Academy of Actuaries that self-insured employers, in particular, may use the rule to shunt less healthy employees out of their group health plans, which in turn could result in worsening the ACA individual-market risk pool.
The Federation of American Hospitals expressed concern that the proposal would shift people out of the employer group market into the less stable individual market, which offers thinner benefits and less support for consumers.
The conservative National Federation of Independent Business supports the new rule but is concerned that it will be a complex process to set this type of arrangement up, especially for small businesses.
The liberal Center on Budget and Policy Priorities said the proposal to let a special type of HRA be used to buy short-term plans could be challenged legally, because the ACA and the Health Insurance Portability and Accountability Act (HIPAA) prohibit group plans from discriminating based on health status, as short-term plans are allowed to do.
by US Rx Care | Feb 12, 2020 | Health care costs
Congress before the new year passed
legislation repealing the so-called “Cadillac tax” on generous group health
plans, as well as two other taxes, finally putting to bed an issue that has
plagued the Affordable Care Act since its inception.
Although it had not yet been implemented,
employers didn’t like the Cadillac and labor unions came out against it as
well. It was so unpopular that Congress voted twice to delay implementation,
which was originally set to start in 2018. The latest start date had been
pushed until 2022.
The Cadillac tax, an enacted but not yet
implemented part of the ACA, is a 40% levy on the most generous
employer-provided health insurance plans — those that cost more than $11,200
per year for an individual policy or $30,150 for family coverage. It was
designed to only tax the portion of the premium that was above the threshold.
Effect of repeal on group plans
The tax would have been levied on health plans, which are legal entities through which employers and unions provide benefits to employees. It would have been paid by employers, but its impact on employees would be indirect and would have depended on how firms and health plan managers responded to the tax in offering and designing benefits.
None of these
issues now need to concern employers offering group plans.
The tax was
eliminated as part of a $1.4
trillion year-end budget bill that President Trump signed in order to keep the
government open. Here are all the ACA-related taxes that the legislation
eliminated:
- The
Cadillac tax, which had been expected to raise $197 billion over 10 years.
- Starting
in 2021, the health insurance tax, which had been projected to raise $150
billion over the next decade, and
- The
2.3% excise on the sale of medical devices,
which had been expected to generate $25.5 billion in the next 10 years.
by US Rx Care | Feb 5, 2020 | Health care costs
A new study
has found that high-deductible plans and increased use of coinsurance are
exposing health plan enrollees to higher and higher pharmaceutical costs.
One of the
big problems for many enrollees in high-deductible plans is that their outlays
for drugs may not count towards their health plan deductibles and, if they are
enrolled in separate pharmaceutical plans, they may have to pay the full list
price until they meet their drug deductible, according to the “2019 Kaiser
Family Foundation Employer Health Benefits Survey.”
The report
warns of a growing crisis for American workers, more and more of whom are
struggling with their health expenditures, be they premiums, deductibles,
copays and/or coinsurance.
Workers in
small firms face relatively high deductibles for single coverage and many also
are saddled with significant premiums if they choose family coverage, according
to the study.
The cost of
group health insurance is growing at about 4% to 5% a year, reaching $7,188 for
single coverage in 2019 and $20,576 for family coverage.
Workers in
small firms on average contribute 16% of the premium for single coverage,
compared with workers at large firms (19%), according to the report. But small-firm
employees contribute 40% on average for family coverage, compared to 26% for
staff at larger firms.
That said, 35%
of covered workers in small firms are in a plan where they must contribute more
than one-half of the premium for family coverage, compared to 6% of covered
workers in large firms.
But premium
contributions are only part of the story. Eighty-two percent of covered workers
have a general annual deductible for single coverage that must be met before
most services are paid for by the plan, and that average deductible amount is
$1,655. But, the average annual deductible among covered workers with a
deductible has increased 36% over the last five years, and by 100% over the
last 10 years.
The hidden cost-driver
With all this
as a backdrop, the cost of prescription drugs is one of the largest challenges
facing group health plan enrollees, especially those who are enrolled in
high-deductible health plans, whose out-of-pocket expenses for pharmaceuticals
can be especially burdensome. It is the hidden cost-driver in the system.
The Kaiser survey found that about 90% of covered workers are enrolled in plans where the health plan deductible must be met before prescription drugs are covered. But, this number has been shrinking as group coverage pricing increases and employers shift more of the cost burden to employees.
There are a few ways that employees are taking on a significant load with their drug expenditures:
- First, more workers are enrolled in plans that carve out prescription drugs, meaning that their expenditures on medication do not count towards satisfying their health plan deductibles. About 13% of employees are enrolled in a plan with a separate annual deductible that applies only to prescription drugs.
- Many people with workers face out-of-pocket costs linked to prescription list prices regardless of the actual net, post-rebate costs. That’s because coinsurance percentages are computed based on the price negotiated between the pharmacy and the plan or pharmacy benefit manager. These negotiated prices are typically close to list prices.
Even worse, patients pay the entire negotiated price when they are within a deductible and do not enjoy the benefits of rebates that the PBM may have negotiated with drug makers. Patients with these benefit designs do not benefit from rebates, though major brand-name drug makers sell their products at half of the list prices.
- In the past, health plans had two- or three-tier benefit designs for drugs, mostly for generics and brand-name drugs, with lower copays and coinsurance for the lowest-tier medicines. But as prices have started increasing, many plans have four tiers and sometimes five (the specialty tier).
The disappearance of two- and three-tier benefit designs have made out-of-pocket expenses especially high for specialty drugs. Plans place therapies for such chronic, complex illnesses as cancer, rheumatoid arthritis, multiple sclerosis and HIV on the fourth and specialty tiers of benefit plan, for which the enrollee has to pay a larger share.
by US Rx Care | Jan 28, 2020 | Health care costs
A new study has found that the average annual
premium for a group family health plan has exceeded $20,000 for the first time
in 2019, up 5% from 2018.
The average premium for single coverage plans
in 2019 is $7,188, up 4% from the year prior, according to the Kaiser Family
Foundation’s annual report on employer coverage.
The costs of high-deductible health plans are
only slightly less than the average. The average premiums for covered workers
in HDHPs with an attached health savings account are $6,412 for single coverage
and $18,980 for family coverage.
Increasingly, workers are picking up a larger
portion of the health care and insurance tab. In 2019, they are paying $6,015 on
average in premiums for family coverage, or about 29% of the total tab. Workers
with individual coverage contribute 17.3% toward the total premium.
Additionally, the average deductible for single coverage is $1,655 in 2019, which is unchanged from the year prior, however, the deductible is often higher for workers in small firms ($2,271) compared to large businesses ($1,412).
The average annual deductible among covered
workers with a deductible has increased 36% over the last five years and 100%
over the last 10 years, according to the report.
Also, 66% of workers have coinsurance and 14%
have a copayment for hospital admissions. The average coinsurance rate for a
hospital admission is 20%, and the average copayment is $326 per hospital
admission.
Another survey by the Kaiser Family Foundation and the Los Angeles Times found that 40% of group health plan enrollees had difficulty affording health insurance or health care, or had problems paying medical bills.
And
close to 50% said that they or a family member had skipped or postponed getting
health care or prescriptions in the past year due to costs.
Easing the burden
There are steps you can take to ease the
burden on both your company and your employees.
Consider plans with telemedicine – More and more employers (69% of firms with 50 or more workers) are offering health plans that cover the provision of health care services through telemedicine. Telemedicine can greatly reduce the cost of care in terms of price for medical visits, as well as the time involved for the employee to travel to the doctor.
Telemedicine can include video chat and remote monitoring.
Utilizing retail health clinics – More health plans will pay for services rendered by retail clinics, like those located in pharmacies, supermarkets and retail stores. These clinics are often staffed by nurse practitioners or physician assistants and treat minor illnesses and provide preventative services. They can greatly reduce the cost of care for these kinds of visits outside normal hospital systems.
Plans with narrow networks – If a health plan can contract with fewer doctors and specialists, there is often less outlay for care. At this point, the jury is still out on exactly how much can be saved, but there are also drawbacks such as:
- Disruption of provider relationships
- Employee backlash
- Reduced access or convenience for
employees
- Lack of specialists.
Tiered or high-performance networks – These networks typically group providers in the network based on the cost, quality and/or efficiency of the care they deliver and use financial incentives to encourage enrollees to use providers on the preferred tier.
by Renzo Luzzatti | Jan 22, 2020 | Health care costs
One of the fastest growing parts of the health care system, and which touches significantly on group health plans, is telemedicine.
From 2016 to 2017, insurance claims for services rendered via telehealth ― as a percentage of all medical claim lines ― grew 53% nationally, faster than any other avenue of care, according to “FH Health Indicators,” a white paper published by the nonprofit FAIR Health.
Telehealth uses technology to provide remote care via video conferencing and other means and is proving to be more and more effective, especially for time-pressed individuals or people who live in rural areas where patients often have to travel great distances for care.
Elderly patients especially find it useful, since it eliminates the need for transportation.
But as telehealth gains traction, the focus is shifting away from the novelty of connected devices and new technology and more toward providing patients with top-notch care ― and giving providers, physicians and nurses alike the power to deliver it effectively. As it evolves, it is also a promising new trend in terms of reducing health care delivery costs.
Telehealth can reduce the cost of care by eliminating the physical barriers that prevent patients from managing their health. As more patients take advantage of digital services like remote patient monitoring, automatic appointment reminders, and remote physician consulting using live video and audio, patients can use these services to reduce the cost of care and improve their chances of early detection.
And that can reduce your overall group health plan costs, as well as out-of-pocket costs for your employees.
Tech firms are coming up with more efficient ways for patients to communicate with their doctors that save time and money, and reduce liability for doctors as well. For example, more and more health care practitioners are adopting an online patient portal as a direct link between the patient and the doctor.
Doctors, patients embrace online portals
The portal can easily be password-protected for each patient and streamline routine interactions from appointment-setting to refilling prescriptions ― and everything in between.
For example, when it’s time to get a prescription refilled, the patient simply makes a request to his or her doctor, via the patient portal or even via a cell phone or tablet app that can be proprietary to the practice. The doctor checks the dosage and approves the request in a few clicks, and in seconds the information is sent directly to a pharmacy so the patient can pick up the prescription.
The patient doesn’t have to get the doctor on the phone or bug the staff for a moment with the doctor, and the doctor doesn’t have to do additional paperwork or get on the phone with the pharmacy to call in the prescription after already having spoken with the patient on a separate call. The result is tremendous time savings ― and ultimately, cost savings for both the doctor and patient.
Online portals also facilitate communication between doctors and patients between appointments. If a patient has a question or clarification that does not warrant an additional office visit, the doctor or staff can quickly respond in an instant, without playing phone tag, and without having to route calls to busy doctors who can’t always be on the phone.
Physicians can also leverage these portal technologies to send lab results and images directly to the patient using a secured and encrypted link, and to make clinical summaries easily available online. When the doctor adds new information to the file, such as a lab report, the portal system can be programmed to automatically send an e-mail alert to prompt the patient to log onto the portal.
For all the technology though, we still have a way to go in implementing it. According to a recent study in the Journal of General Internal Medicine, 57% of respondents said they want to use their doctor’s website to review their medical records, but only 7% of those polled reported having made use of that technology to access their own information online.
A study from the Annals of Internal Medicine found that 77% to 87% of individuals who used their physician’s portal to open at least one note, and who completed a post-intervention survey, said that the process helped them be more in control of their health care.
