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by Leila Morris
HEALTHCARE
• Copayments and Coinsurance Rise Under The ACA
• Most Providers Like the ACA
• Americans Lack Faith in Primary Care
• Group Wants Extension for Open Enrollment for Individuals
• Overcoming Coverage Denials for Weight Loss Surgery
• Young Adults Lead Exchange Enrollment Trends
• Patients Are in Denial About Diabetes Risks
• Value Based Design the Right Way
IN CALIFORNIA
• Bill Would Extend Coverage to the Undocumented
EMPLOYEE BENEFITS
• Pressing Issues For HR Professionals
NEW PRODUCTS
• Medicare Smartphone Quoting
• Term Life Insurance
FINANCIAL PLANNING
• Growing Interest For Fiduciary Services
• Many Older Workers Have No Plan for Their DC Plan Assets
• DC Plan Sponsors Are Adding Alternatives
HEALTHCARE
Copayments and Coinsurance Rise Under the ACA
Copayments and co-insurance fees for drugs in the individual insurance market increased 34% compared to before the Affordable Care Act (ACA). All of the four metal health plan categories under the ACA had drug cost-sharing increases. Bronze health insurance plans had the highest increase at 58% while Platinum health insurance plans had the lowest increase at 15%.
Plan enrollees who use brand name drugs and specialty drugs face the greatest burden from the increases in copayments and co-insurance fees while enrollees who use medications infrequently are not likely to notice the cost-sharing increases.
The 34% increase in copayments and co-insurance fees does not mean that consumers will spend 34% more on drugs. Drug spending is also affected by deductible amounts, out-of-pocket caps, and what drugs are included within a health plan’s list of covered medications.
Before the Affordable Care Act, nearly one-out-of-five private individual health insurance plans had no prescription drug coverage while all new health plans in the individual market include a drug benefit. In addition, patients can get over-the-counter drugs, such as aspirin, folic acid, and iron supplements, with no out-of-pocket cost when used as preventive medicine.
“With copayments and co-insurance fees rising, consumers must shop health plans more carefully. Copayments, deductible amounts, and limits on annual drug spending should not be ignored. Consumers can also discuss with their doctors whether there are alternative drugs that have lower costs but equivalent therapeutic results,” said Kev Coleman, Head of Research & Data at HealthPocket. For more information, visit www.HealthPocket.com.
Most Providers Like the ACA
Nine out of 10 healthcare providers say that, once it is fully established, the Affordable Care Act (ACA) will be a step forward in addressing long-term health issues, and 83% say it is good for Americans, according to a survey by Mortenson Construction. However, 86% say the ACA needs major revisions.
Seventy-nine percent of providers say health reform creates significant uncertainty for the healthcare industry. Seventy-four percent predict that it will challenge their organization’s financial condition, and 72% say it already has. The survey also reveals the following:
• In 2013 60% of healthcare providers were optimistic about the future of U.S. health care compared to 85% in 2012.
• Four out of five say the ACA will shift reimbursements to pay for the quality of outcomes.
• 71% say the ACA will improve quality and outcomes, and 65% say it will lower the cost of care
• 95% say that specialized facilities, such as MRI centers, cancer centers, and urgent care centers, will grow in prominence in the next three years.
For more information, visit mortenson.com.
Americans Lack Faith in Primary Care
Americans are deeply skeptical about the viability of the primary-care physician model, which is the predominant health care delivery system in the United States, according to survey commissioned by PartnerMD. Sixty-nine percent are worried about the future of the traditional primary-care model. They are also worried that the Affordable Care Act (ACA) will severely limit their contact with doctors.
Fifty-one percent are worried about rising health care costs and 23% are worried about new health care regulations. Only 10% of expect the ACA to improve their care while one-third are concerned about its negative effects on care. PartnerMD CEO Linda Nash said, “I am a strong supporter of implementing an affordable national health care system, but as millions of new patients are entering the system, increased workloads and shrinking reimbursements are driving physicians out of it. The result is a care model that’s falling short.”
The following survey data confirms the bleak state of the traditional primary-care model:
• More than one-third of patients have to wait four or more days to see their doctor, and nearly one-quarter have to wait longer than a week.
• 93% of Americans spend less than 30 minutes with their doctor at appointments, and nearly one-third see them for less than 10 minutes.
“The traditional model puts doctors under tremendous pressure to treat huge numbers of patients at light speed. And full appointment schedules leave those with acute care needs without many options. It’s understandable that many patients and physicians are looking for a better care model,” said Dr. Jim Mumper, a PartnerMD physician and the company’s chief medical officer.
One such model that has seen tremendous growth is concierge medicine. PartnerMD’s survey found that 13% of Americans are willing to pay an annual fee for increased access to their physician, which could represent more than 31 million more patients in the concierge model. “While we have seen tremendous expansion, there’s still a huge opportunity for growth in the membership-based model,” said Nash. For more information, visit www.PartnerMD.com.
Group Wants Extension for Open Enrollment for Individuals
Chairman of Communicating for America, Jeff Smedsrud is calling on President Obama to extend the health exchange open enrollment period for individuals, which is set to end on March 31. Individuals who miss the deadline generally can’t enroll until the next open enrollment period, which begins November 15, 2014.
Smedsrud wants the open enrollment period to be extended until May 15, 2014. Individuals who don’t find suitable coverage by then should be encouraged to enroll in a short-term medical plan. Although there are some coverage limitations with short-term medical plans, they are available from a variety of companies in every state for at least a six-month duration, he said.
Smedsrud added that the Administration has given businesses more time by delaying certain mandates, and has given insurers more time by letting companies change certain policy cancellations. “It’s not the fault of consumers that state and federal exchanges had technical problems upon the roll-out, nor are they to blame for ongoing problems with billing, collection and verification, making it difficult to know… if they have coverage. And it is not the consumer’s fault that millions of health policies were cancelled…Don’t make individuals suffer for mistakes made by institutions.”
Smedsrud is calling the Administration to take three actions:
1. Extend the open enrollment period until May 15.
2. Delay the start date for the individual mandate penalty until May 15.
3. Allow short-term medical plans purchased in 2014 to meet the definition of credible coverage, thus allowing those enrolled in such plans to switch at any time during 2014 to a more comprehensive plan under Special Enrollment rules.
For more information, visit http://communicatingforamerica.org
Overcoming Coverage Denials for Weight Loss Surgery
Despite the medical need for weight loss surgery, Beverly Hills Physicians issued a statement that it has seen its fair share of insurance claims rejections. So the medical group rounded up advice from around the Internet for those hoping that their insurance will cover weight loss surgery. A recent article published on CNNMoney suggests a three steps those who have been denied by their insurer:
1. Look for errors in the request for surgery.
2. Get your doctor to provide a written note in order to make a stronger case for an appeal.
3. Ask again if you are rejected. You have the right to request a review by an independent panel after your second denial. .
Providers, such Beverly Hills Physicians, are willing to help patients with these steps. For more information, visit www.facebook.com/beverlyhillsphysicians.
Young Adults Lead Exchange Enrollment Trends
Enrollment in the Health Insurance Marketplace continued to rise in January, with a 53% increase in enrollment over the previous three-month reporting period, with young adult enrollment outpacing all other age groups combined, announced HHS Secretary Kathleen Sebelius.
Nearly 3.3 million people enrolled in the Health Insurance Marketplace plans by Feb. 1, 2014 (the end of the fourth reporting period for open enrollment). January accounting for 1.1 million plan selections in state and federal marketplaces. In January, 27% of those who selected plans in the federally facilitated marketplace are 18 to 34, a three percentage point increase over the figure said for the previous three month period. Young adult enrollment grew 65% in January, from 489,460 at the end of December to 807,515 as of February 1st. All other age groups combined grew by 55%. Eighty-one percent of young adults (18 to 34) selected plans at the Silver metal level or higher (Silver, Gold and Platinum plans).
Nearly 3.3 million people selected Marketplace plans from Oct. 1, 2013, through Feb. 1, 2014, including 1.4 million in the State-based marketplaces and 1.9 million in the federally facilitated marketplace.
• Of the almost 3.3 million:
• 55% are female and 45% are male.
• 31% are age 34 and under.
• 25% are between the ages of 18 and 34.
• 62% selected a Silver plan while 19% selected a Bronze plan.
• 82% selected a plan and are eligible to receive Financial Assistance, up from 79% during the Oct. 1 through Dec. 28, 2013 reporting period.
To read the report visit: http://aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Feb2014/ib_2014feb_enrollment.pdf.
Patients Are in Denial About Diabetes Risks
Nearly 80% of patients who are at elevated risk for Type 2 Diabetes seem to be deluding themselves by assuming that they are in excellent or very good health, according to a survey from the American Diabetes Association (ADA). “These findings suggest it is critical for providers to connect the dots with patients between risk factors and disease development,” said Virginia Peragallo-Dittko, R.N., C.D.E., incoming chair of the ADA’s Prevention Committee. For more information, visit www.ada.org
Value Based Design the Right Way
A survey by CVS Caremark finds that value based insurance design plans are more successful in increasing patients’ medication adherence when they have these features:
* Plans with no cost sharing for generic drugs and low monthly copayments of $10 or less and co-insurance rates of $15 or less for brand-name medications.
* Plans that target high-risk patients.
* Plans with wellness programs.
* Plans that offer the benefit only by mail order and offer 90-day prescriptions.
William H. Shrank, MD, MSHS of CVS Caremark said, “These findings encourage more generous coverage for generics, greater use of 90-day prescriptions, more careful intervention targeting, and expansion of wellness programs.” For more information, visit info.cvscaremark.com.
IN CALIFORNIA
Bill Would Extend Coverage to the Undocumented
Senator Ricardo Lara (D-Huntington Park/Long Beach) introduced Senate Bill 1005, the Health For All Act. The bill would give undocumented residents access to the Covered California exchange and Medi-Cal. The Affordable Care Act (ACA) excludes undocumented immigrants from the Covered California exchange. An estimated three to four million people in the state will remain uninsured in spite of ACA, and almost a million of those will be undocumented residents ineligible for coverage. “Excluding people from access to care hurts the health of our communities, and does not reflect California values,” said Lara. The estimated annual tax contribution of undocumented immigrants in California is $2.7 billion and 92% of this population live in working families. For more information, visit http://www.senate.ca.gov/lara.
Covered California Attempts to Boost Latino Enrollment
With six weeks to the end of open enrollment on March 31, Covered California has a grassroots outreach campaign in major Latino communities. Since December, the exchange has nearly doubled its advertising campaign targeting Spanish- and English-speaking Latinos; improved its Spanish-language website and informational materials; and increased the number of bilingual certified enrollment counselors and service center representatives. The grassroots outreach campaign targets Los Angeles (the San Gabriel Valley, the San Fernando Valley and South Los Angeles), the Inland Empire (San Bernardino and Riverside counties), and the Central
Valley and the San Joaquin Valley (Stockton/Modesto and Fresno/Bakersfield).
This approach will coordinate outreach and education grantees, certified enrollment entities and certified enrollment counselors, certified insurance agents, county human services offices, elected officials, health care providers, nonprofit organizations and health insurance companies to jointly meet the health coverage needs of the local community.
Messages will encourage people to seek help through thousands of local enrollment counselors and agents who can help them confidentially and at no cost. To date, there are 4,180 Spanish-speaking certified enrollment counselors and certified insurance agents available throughout California. Partnerships are also being developed with Southern California Latino supermarkets to host enrollment events in stores and to include Covered California information in their weekly advertising circulars.
Covered California will spend $8.2 million in Spanish-language media from January to March 2014, an increase of 73% from the October-December 2013 media spend. A new advertising campaign highlights Covered California Latino enrollees who describe how getting coverage through Covered California has affected them.
Covered California has been airing radio advertisements offering consumers no-cost, private, one-on-one consultations with qualified representatives who will answer questions from consumers and help them enroll in quality, affordable health insurance.
For more information, visit www.CoveredCA.com.
EMPLOYEE BENEFITS
Pressing Issues For HR Professionals
Mary Tavarozzi, a practice leader for Absence and Disability Management at Towers Watson offers her take on important issues for HR professionals. In the summary below, she also covers some of what she’ll be presenting on at the 2014 IBI Annual Forum March 3 to 5 in San Francisco):
• ACA benefits and challenges for employers – The upcoming excise tax on Cadillac health plans forces employers to question the design of their programs as they fight to attract and retain employees. They have to weigh having the most competitive and attractive program against reducing the tax consequences.
• Wellness programs – The challenge is whether employers can offer the financial incentives that are needed to produce outcomes.
• Consumer driven health plans – All of the preventive health care that is part of the ACA encourages healthy consumer behavior. Employers are facing the decision to build or buy a platform for delivering employee choice and engagement. With private exchanges, employees can choose among different levels of coverage and different health plans. Increased transparency means that employees can make good choices based on information about cost and quality. This is all very beneficial in moving the needle toward consumer-driven health care.
• Large Employers — Large employers will always have some financial responsibility for employees’ health benefits. If employers send workers to a public exchange, they can still promote health by sponsoring health risk assessments for employees and their families; making health concierge services available; joining with other companies in their area to sponsor urgent center clinics; offering healthy food in the cafeteria and vending machines; hosting health screening trucks; and encouraging employees to get preventive care. For more information, visit http://www.towerswatson.com/en-US.
NEW PRODUCTS
Medicare Smartphone Quoting
Cigna introduced a texting and smartphone quoting process along with other mobile enhancements for agents selling its Cigna Medicare Supplement Solutions and Cigna Supplemental Solutions insurance products. When agents can send a text message with a customer’s zip code, age, and gender, they immediately receive premium rates for available Medigap insurance plans as well as a quote for final expense whole life insurance. Agents can also get alerts to follow the status of the applications they have submitted. For more information, email CSBMarketing@Cigna.com or visit www.cigna.com.
Term Life Insurance
MetLife launched simplified issue term life insurance for anyone from 18 to 70. It can be purchased over the phone with same-day approval. The product is offered in face amounts from $10,000 to $100,000. It renews automatically each year, up to age 90 and renews without additional underwriting as long as premiums are paid. For more information, visit www.metlife.com.
FINANCIAL PLANNING
Growing Interest For Fiduciary Services
Nationwide Financial reports growing interest in third-party fiduciary services. Since introducing its 3(38) investment fiduciary service from IRON Financial, approximately 400 plans with more than $600 million in assets have opted to outsource the investment selection and monitoring process. Changing market dynamics and evolving regulations around the role and definition of a fiduciary has led many plan sponsors to seek help from outside professionals to ensure they are meeting their fiduciary obligations. Under section 3(38) of the Employee Retirement Income Security Act of 1974 (ERISA), an investment manager is defined as one who has full discretion for selecting, monitoring and replacing plan investments. This type of fiduciary assumes the legal responsibility and liability for the investment decisions it makes, which enables the plan sponsor to better manage and mitigate its fiduciary risk.
Joe Frustaglio for Nationwide Financial said, “Investment selection and ongoing due diligence are important and often intimidating fiduciary responsibilities for a plan sponsor. Plan sponsors, especially America’s small businesses, have many time constraints. Working with an expert not only reduces risk, but also gives them more time to focus on running their business.
While there is growing demand for outside fiduciary support, ERISA has always permitted plan sponsors to delegate some fiduciary responsibilities and liabilities. Nationwide provides its clients a full array of fiduciary education and support services. For more information, visit www.nationwide.com/401k-fiduciary-education.jsp.
Many Older Workers Have No Plan for Their DC Plan Assets
A LIMRA study reveals that 27% of workers, age 55 to 64 don’t know how they will use their defined contribution (DC) plan savings after they retire. Women are much more likely than men not to have planned how they will use their DC assets (38% versus 19%).
Matthew Drinkwater of LIMRA SRI Research said, “Many believe that they can delay retirement indefinitely, or work in retirement, so it’s possible they feel that there’s no near-term need to engage in this kind of planning. But that belief is risky. People often retire earlier than anticipated. It makes sense to give thought to how you will use your DC plan balances sooner rather than later.”
Two-thirds of workers ages 55 to 64 plan to make withdrawals directly from their DC accounts or make withdrawals after rolling over the assets into an IRA. Only one in six plans to convert some or all of their balance into a guaranteed lifetime income.
Twenty-four percent of workers age 55 to 64 who have income-generation strategies plan to take systematic withdraws from their retirement savings. Sixty-five percent plan to withdraw money on an occasional basis or when needed. Simple procrastination is the top reason given for people to have no income strategy. For more information, visit www.secureretirementinstitute.com.
DC Plan Sponsors Are Adding Alternatives
John Hancock Investments’ defined contribution (DC) clients are adding alternative mutual funds to their menu of plan options at a rapid pace. Since the end of 2012, more than 400 plans have added John Hancocks’ alternative strategies including John Hancock Global Absolute Return Strategies Fund and John Hancock Alternative Asset Allocation Fund.
Andrew Arnott, president and CEO of John Hancock Investments explained, “After the heightened volatility of the past few years, plan sponsors and record-keepers are starting to embrace investments and strategies that are less correlated with traditional stock and bond markets.” These strategies offer the potential for deeper diversification and a way to manage volatility. At the same time, the mutual fund structure offers lower fees, daily liquidity, and stringent oversight that investors don’t typically get through hedge funds, he added.
Respondents in a January Ignites reader poll predicted that liquid alternatives would be the top asset-gathering category in 2014, due to their potential to generate returns and to the lukewarm outlook for traditional equity and fixed-income products.
Todd Cassler, president of Institutional Distribution for John Hancock Investments said “Retirement plan sponsors and participants are finding multiple benefits in this all-in-one approach. Participants don’t need to worry about being conversant with all the details of all the strategies because the assets are professionally allocated among multiple alternative strategies and managers. At the same time, plan sponsors are able to add this varied alternative asset category in a single, diversified option.” For more information, visit johnhancock.com.