by US Rx Care | Dec 18, 2020 | Uncategorized
The COVID-19 pandemic has impacted businesses and other organizations in multiple ways. Lost revenue and the overnight change to remote workforces, among other things, have caused significant changes to operations and finances. A new report shows that there will be long-term effects on employee benefit programs as well.
Health insurers are forecasting continued cost increases that dwarf general inflation rates, according to the report by Mercer Marsh Benefits. Most expect 2021 medical cost inflation to come in at 4.3%, slightly higher than in 2020. They anticipate the trend of escalating costs to continue next year and going forward.
The culprits? The high costs of diagnosing, caring for and treating COVID-19 patients. A survey of studies released in September showed that half of all COVID-19 patients who were admitted to an intensive care unit were there more than seven days. ICU patients who need ventilators also cost more to treat – 59% more per day, according to one report.
A new landscape for plan outlays
Like this year, 2021 will be a very different one for group health plan outlays, as a number of novel factors take center stage, including:
A rebound in elective diagnostics and treatments – Mercer Marsh predicts a rebound in some elective treatments when it is safe to resume these procedures in 2021. On the other hand, some elective procedures that were postponed will never be rescheduled as people end up taking a different non-surgical course and ideally recover from their ailment or use lower cost-of-care virtual services.
Delays leading to greater need for care – Delays in treatment for serious conditions, such as cancer, and exacerbation of other chronic conditions, like diabetes, may require more invasive and expensive care. Many people have postponed these treatments during the pandemic and doing so may end up increasing the cost of the treatments if their conditions have deteriorated.
New claims linked to remote working – The report predicts a higher incidence of conditions relating to remote working and sedentary lifestyle, including musculoskeletal and mental health issues. According to the journal The Lancet Psychiatry, “A major adverse consequence of the COVID-19 pandemic is likely to be increased social isolation and loneliness … which are strongly associated with anxiety, depression, self-harm, and suicide attempts across the lifespan.”
COVID-19-specific claims – Sixty-eight percent of insurers expect to see higher outlays due to the cost of COVID-19-related diagnostics, care and treatment. There is also the issue of paying for a vaccine once one becomes available. These costs cannot be predicted at this point.
Ongoing COVID-19 concerns – The long-term physical and mental health effects on survivors of COVID-19 are largely unknown. Some coronavirus “long-haulers,” who have lingering symptoms and effects that can last for months, may require additional treatment and doctors’ visits as they try to cope.
Increases to unit prices – Prices for a wide range of services are increasing as demand rises and/or to offset revenue lost due to COVID-19. Mercer Marsh found that 68% of insurers expect costs will rise in 2021 because of health providers charging more to offset revenue lost due to the cornavirus.
New PPE costs – The unit cost of care is also being driven up by the cost of personal protective equipment, which is being added to many treatment bills.
The takeaway
In the years ahead, employee benefits will change in terms of the services they provide, the treatments they cover, and the way they will be delivered.
More doctors’ visits will be done via tablet computers. Coverage for preventive medicine will increase to drive better and less expensive health outcomes. But even with that, a vicious pandemic coupled with uninvited changes in lifestyles will likely drive up the cost of those benefits for years to come.
by US Rx Care | Dec 9, 2020 | Uncategorized
The Trump administration has issued new interim final rules that set out accelerated coverage requirements for COVID-19 preventative services and covering out-of-network testing for the coronavirus.
There are two parts to the interim final rules:
- One requires that COVID-19 preventative services – including vaccines – be covered without any cost-sharing on the part of plan enrollees.
- The second creates a reimbursement formula for insurers to pay for COVID-19 testing conducted on their enrollees by out-of-network providers.
The new rules, which implement important parts of the CARES Act, were rolled out by the Treasury, Labor, and Health and Human Services departments.
If you are a plan sponsor, you need to know how this affects your group health plan so you can help your staff understand how testing and preventative COVID-19 services are covered.
COVID-19 preventative services
The CARES Act requires that COVID-19-related preventative services be covered within 15 business days after a doctor recommends that a patient needs them.
COVID-19 preventative services must be covered without any out-of-pocket costs on behalf of health plan enrollees, whether they receive those services inside or outside their plan’s provider network. The reason for this is that as vaccines start rolling out, not all providers may have access in the beginning.
The rules are required to ensure that people who need vaccines can access them without any hardship to help put an end to the pandemic.
Under the rules, insurers must pay out-of-network providers a “reasonable amount,” which would be determined by the prevailing market rates that providers are charging health plans for the service. That may be the Medicare rate, the regulations note.
The rules cover more preventative services than just vaccines. They must also cover services that are “integral” to delivering preventative services, such as administrative costs.
Finally, if a preventative service, including a COVID-19 vaccine, is not billed separately from an office visit, and the primary purpose of the office visit is to deliver the recommended service or vaccine, the plan or insurer may not charge cost-sharing for the office visit.
COVID-19 tests by out-of-network providers
The new rules also set out the parameters for how health plans will pay out-of-network providers for COVID-19 diagnostic tests they perform on the latter’s enrollees.
On testing, the CARES Act requires that:
- Health care providers post on their websites the cash price or any lower negotiated price for COVID-19 diagnostic testing. The “cash price” is the charge that applies to a walk-in patient who pays cash for the service.
- Health insurers pay out-of-network providers of COVID-19 diagnostic tests the price posted on the provider’s website during the public health emergency.
The takeaway
If you sponsor a group health plan, you should communicate the new rules to your participating employees so that they are aware of the no out-of-pocket rules for COVID-19 preventative services.
You should also keep up with the news about when vaccines will be rolled out in your area, so you can encourage your staff to get vaccinated.
The new rules will sunset at the end of the public health emergency. Currently, that’s slated for Jan. 21, 2021, but will likely be extended as it is unlikely a vaccine can be rolled out en masse by that time.
by US Rx Care | Dec 3, 2020 | Uncategorized
The Trump Administration has issued a new rule that will require greater price transparency on the part of health insurers, including the rates charged by in-network physicians and copays and costs of drugs.
The final rule requires health plans and health insurers to disclose on a public website their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs.
The aim of the new rule is to give health plan enrollees more information when it comes to making decisions when seeking out and price-comparing care and choosing medications. With more information about health care costs, health plan enrollees can:
- Make cost-conscious decisions,
- Face fewer out-of-pocket surprise bills, and
- Potentially lower their overall health care costs.
The drug price transparency part of the final rule came as a surprise because it was not included in the original proposed regulations.
The new rules do not, however, take effect right away and different parts will be implement at different times. Nonetheless, it’s important for health plan sponsors and employers to be aware of the rules as they will greatly affect how their employees access and shop for coverage and medications.
Most of the rules do not apply to grandfathered plans. Here’s what they will do once they come into effect:
Transparency for enrollees
Insurers will be required to make available to health plan enrollees the following information:
- Personalized out-of-pocket cost information (for their particular plan) for all covered health care items and services, including prescription drugs.
- All underlying negotiated rates for all covered health care items and services, including prescription drugs.
This information must be provided through an online tool on their website and in paper form upon request. Items or services include encounters, procedures, medical tests, supplies, drugs, durable medical equipment, and fees (including facility fees).
Insurers will be required to make available an initial list of 500 shoppable services that will be determined by the Centers for Medicare and Medicaid, starting with the 2023 plan year. The remainder of all items and services will be required for these self-service tools for plan years that begin on or after Jan. 1, 2024.
Public transparency
Health insurers will be required to make available to the public, consumers, researchers and others the following information in “machine-readable” files:
- Negotiated rates for all covered items and services with in-network providers.
- Historical payments to, and billed charges from, out-of-network providers.
- In-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level.
The idea behind these changes is to provide opportunities for detailed research studies, data analysis, and offer third party developers the ability to create private apps and websites to help consumers shop for health care services and prescription drugs.
These files are required to be made public starting with the 2022 plan year.
The takeaway
These are final rules but, as mentioned, the part of the rule that affects your group health plan and your employees doesn’t take effect until 2023 as the industry will need time to prepare and comply.
Once the rules take effect, your covered employees should have a wealth of information at their fingertips when they are shopping and comparing health services and drug information.
by US Rx Care | Nov 24, 2020 | Uncategorized
As the COVID-19 pandemic rages on and more employers bring staff back to the workplace, many businesses are considering implementing mandatory vaccination policies for seasonal flus as well as the coronavirus.
A safe and widely accessible vaccine would allow businesses to open their workplaces again and start returning to a semblance of normalcy. But employers are caught in the difficult position of having to protect their workers and customers from infection in their facilities as well as respecting the wishes of individual employees who may object to being required to be vaccinated.
The issue spans Equal Opportunity Employment Commission regulations and guidance, as well as OSHA workplace safety rules and guidance. With that in mind, employers mulling mandatory vaccination policies need to consider:
- How to decide if such a policy right for the company,
- How they will enforce the policy,
- The legal risks of enforcing the policy, and
- Employer responsibilities in administering the policy.
Proceed with caution
A number of law firms have written blogs and alerts on the subject of mandatory vaccinations, and the overriding consensus recommendation is to proceed with caution.
In 2009 pandemic guidance issued during the H1N1 influenza outbreak, the EEOC stated that both the Americans with Disabilities Act and Title VII bar an employer from compelling its workers to be vaccinated for influenza regardless of their medical condition or religious beliefs – even during a pandemic.
The guidance stated that under the ADA, an employee with underlying medical conditions should be entitled to an exemption from mandatory vaccination (if one was requested) for medical reasons. And Title VII would protect an employee who objects due to religious beliefs against undergoing vaccination.
In these cases, the employer could be required to provide accommodation for these individuals (such as working from home).
Additionally, the employer would have to enter into an interactive process with the worker to determine whether a reasonable accommodation would enable them to perform essential job functions without compromising workplace safety. This could include:
- The use of personal protective equipment,
- Moving their workstation to a more secluded area,
- Temporary reassignment,
- Working from home, or
- Taking a leave of absence.
One issue that employment law attorneys say may not have any legal standing is if an employee objects to inoculation based on being an “anti-vaxxer,” or someone who objects to vaccines believing that they are dangerous. In this case, depending on which state your business is located, you may or may not be able to compel an anti-vaxxer to get a vaccine shot.
Protecting your firm
To mount a successful defense of a vaccination policy if sued, you would need to be able to show that the policy is job-related and consistent with business necessity. And that the rationale is based on facts, tied to each employee’s job description and that you enforce the policy consistently without prejudice or favoritism.
Also, you must ensure that any employee who requests accommodation due to their health status or religious beliefs does not suffer any adverse consequences. In other words, you cannot punish someone that is covered by the ADA or Title VII for refusing a vaccine.
Also, you will need to project and safeguard your employees’ medical information, under the law.
The takeaway
A number of employment law experts say that once a vaccine is widely available, most employers will likely have the right to require that workers get it, as long as they heed the advice above about the ADA and Title VII. Until then, you may want to consider following the 2009 guidance.
If you do implement a policy requiring vaccination, consider:
- Fully covering vaccine costs if they are not fully covered by your employees’ health insurance.
- Allowing employees to opt out entirely if they have medical or religious objections.
- In the event of a medical or religious objection, you must engage in an interactive process to determine whether the individual’s objections can be accommodated.
- Including safeguards for keeping your employees’ medical information confidential.
- Not abandoning your other efforts to keep your workplace safe, such as the use of social distancing, regular cleaning and disinfecting, and the use of personal protective equipment.
by US Rx Care | Nov 17, 2020 | Uncategorized
U.S. employers are expecting their group health insurance costs to climb 4.4% in 2021, despite the ravages of pandemic and a likely uptick in health care usage next year, according to a new survey.
The expected rate increases are on par with much of the last few years when insurance premium inflation has hovered between 3% and 4%. Despite the expected increase, employers do not plan to cut back on benefits for their employees, according to the Mercer “National Survey of Employer-Sponsored Health Plans 2020.”
The COVID-19 pandemic has injected a large dose of uncertainty into the marketplace. Overall, health care expenditures have plummeted since the pandemic started, which at first seems counterintuitive. But many hospitals postponed elective and non-emergency surgeries and procedures, while fewer individuals were seeking care either out of fear of going in for it or because they could not get appointments.
For example, the first three months after the pandemic had gotten a foothold in the U.S., according to the Willis Towers Watson “2020 Health Care Financial Benchmarks Survey,” monthly paid claims per employee dropped as follows:
- April: 21%
- May: 29%
- June: 14%
“So far, the additional medical costs associated with the testing and treatment of COVID-19 have been more than offset by significant reductions in utilization across many service categories,” the insurance industry research firm recently wrote in its report.
Additionally, the Mercer report predicts that a significant portion of the deferred care will never be realized. And, for those people who have deferred care, when they eventually decide to come for the care will also depend on the course of the pandemic, hospital capacity and whether people feel safe to go in for the treatment.
“Different assumptions about cost for COVID-related care, including a possible vaccine, and whether people will continue to avoid care or catch up on delayed care, are driving wide variations in cost projections for next year,” Tracy Watts, a senior consultant with Mercer, said.
Employer reactions
Despite the expected cost increases, Mercer found that few employers plan to make any changes to their benefits this year, as they seek to keep things stable for their staff. The survey found that:
- 57% will make no changes at all to reduce cost in their 2021 medical plans (up from 47% in the prior year’s survey).
- 18% will take cost-saving measures that shift more health care expenses to their employees, including raising deductibles and copays.
Employers are also adding benefits, some of them prompted by the pandemic and shifts in how health care is accessed. For example:
- 27% are adding or improving their telemedicine services (telemedicine for episodic care, artificial-intelligence-based symptoms triage, ‘text a doctor’ apps, and virtual office visits with a patient’s own primary care doctor).
- 22% are adding or improving their voluntary benefits (critical illness insurance or a hospital indemnity plan).20% are boosting their mental health services coverage.
- 12% are offering targeted health services, like for diabetes and other chronic conditions.
- 9% are offering more support for complex cases.
- 4% are offering services to limit surprise billing.
The takeaway
Mercer noted the following trends going into 2021:
Keeping the status quo – A majority of employers surveyed are avoiding making any changes to their health plans, including increasing employee cost-sharing, even if premiums increase. Instead, they are focused on providing a stable source of health insurance for their staff and supporting their workers as they deal with stress and effects of the pandemic.
Digital migration – More employers are offering digital health resources like telemedicine, telehealth apps, and virtual office visits, for their convenience, safety, efficiency, and cost-effectiveness.
Costs uncertain – Due to the effects of the COVID-19 pandemic, cost projections are uncertain at best. The avoidance of medical care could translate into a higher utilization in 2021 and hospitals may start charging more to recoup lost revenues from 2020. Or people may have forgone a lot of that care forever. It’s too early to tell.
by US Rx Care | Nov 11, 2020 | Uncategorized
Group health plan insurers are paying out $689 million in rebates to plan sponsors this year, as required by the Affordable Care Act’s “medical loss ratio” provision.
The provision requires insurance companies that cover individuals and small businesses to spend at least 80% of their premium income on health care claims and quality improvement, leaving the remaining 20% for administration, marketing and profit.
The MLR threshold is higher for large group insured plans, which must spend at least 85% of premium dollars on health care and quality improvement.
Employers who sponsor health small and large group health plans around the country in the last few months have received notices of rebates from their insurers. For those who have received one for the first time, there’s always a question of what they should do with the surprise funds.
MLR rebates are based on a three-year average, meaning that 2020 rebates are calculated using insurers’ financial data in 2017, 2018 and 2019.
You received a rebate…now what?
Health insurers may pay MLR rebates either in the form of a premium credit (for employers that are still using the insurer) or as a lump-sum payment. More than 90% of group plan rebates come as a lump-sum payment.
Once an employer receives this money, it is their responsibility to distribute the rebate to plan beneficiaries appropriately within 90 days, or risk triggering ERISA trust issues.
How the employer distributes the check will depend on how much their employees contribute to the plan, if at all. Here are the basic rules for employers handling their MLR rebate checks:
- If you paid 100% of the premiums, the rebate is not a plan asset and you can retain the entire rebate amount and use it as you wish.
- If the premiums were paid partly by you and partly by the participants, the percentage of the rebate equal to the percentage of the cost paid by participants must be distributed to the employees.
If you have to distribute funds to the plan participants, the Department of Labor provides a few options (if the plan document or policy does not already prescribe how they should be distributed):
- The funds can be used to reduce your portion of the annual premium for the subsequent policy year for all staff who were covered by all of your group health plans.
- The funds can be used to reduce your portion of the annual premium for the subsequent policy year for only those workers covered by the group health policy on which the rebate was based.
- You can provide a cash refund to subscribers who were covered by the group health policy on which the rebate is based.
How it works (example)
- Total premiums paid to an insurance company for a plan with 100 covered employees during 2019 = $2,000,000.
- Total participant contributions during 2019 = $500,000 (25% of total plan premiums for the year).
- The employer receives a $30,000 rebate from the carrier in 2020.
- A total of $7,500 is considered plan assets and must be distributed to the employees (25% of the $30,000).
Tax treatment of cash refunds
If your employees paid for their share of the health premium with pre-tax earnings, the refund would also have to be taxed. But if they paid for their premiums post-tax, they would not be required to pay taxes on the refund (unless they deducted the premiums on their income tax returns).
You must distribute rebates to your staff within 90 days of receiving them.
