Subscribe to Insurance Insider News
by Leila Morris
HEALTHCARE
• The Fallout of Delaying the Employer Mandate
•Verification of Exchange Eligibility is Delayed
• The ACA Is Spurring the Captive Market
• Business Owners Are Not Sure How To Prepare For ObamaCare
• Bill Would Expand HSAs & FSAs
• HSA Enrollment Soars
• Medicare Lacks Cost Consistency
• CMS Proposal Excludes Coverage for Alzheimer Diagnostic Tool
• CMS Proposes Payment for Macular Degeneration Treatment
• Preferred Pharmacy Networks Found to Save Money
• National PBM Coalition is Launched
LONG TERM CARE
• If You Live Long Enough, Needing Long-Term Care Is Practically Inevitable
EVENTS
• Health Care Reform Seminar
• Health Care Consumerism Conference
HEALTHCARE
The Fallout of the Employer Mandate Delay
The White House has decided to postpone the employer mandate, the rule that says large employers with 50 or more full-time equivalent workers must offer qualified, affordable coverage or pay a penalty.
Employers Get More Time to Prepare
Julio Portalatin, president and CEO of Mercer said, “The delay will give employers more time to cope with some of the requirements, but they know it’s no free pass. We expect employers to stay 100% focused on cost management.”
Mercer expects employers to continue preparing for compliance. In a May survey by Mercer, about a fourth of employers hadn’t decided how they would track and report variable employee work hours and a third hadn’t decided which look-back period to use.
About a third of employers do not offer coverage to employees working 30 0r more hours a week. Many of these employers have already made plans offer the coverage in 2014. “Most have not announced changes yet, and if they have an extensive part-time work force, the money to be saved by not expanding coverage in 2014 could be considerable,” said Tracy Watts, a Mercer senior partner.
Janet Trautwein, CEO of NAHU said that delaying the mandate will allow businesses that are recovering from the recession to make sound business decisions in complying with the law without fear of significant financial penalties in the first year of changed operations. Trautwein noted that about 98% of all large employers in the United States already offer coverage.
Private Exchanges May Get a Boost
According to Mercer, the delay creates a gap year for employees that had been enrolled in mini-med plans, which cannot be offered after the end of the 2013 plan year. This may give employers another reason to offer a private health exchange in 2014. Employees who don’t qualify for subsidies in the public exchanges can purchase lower cost medical plans and supplemental medical benefits through a private exchange. Because employers don’t have to make their coverage affordable for another year, employers can choose whether, or how much, to contribute to the cost of coverage.
California Insurance Commissioner Dave Jones said, “Over 92% of California employers with more than 50 employees already offer health insurance…We anticipate that they will continue to do so…even without the existence of a penalty…The requirement that large employers provide health insurance to their employees is an important component of ObamaCare and the Administration should make sure that this provision can be implemented in 2015. In the meantime, uninsured workers will be able to purchase health insurance through the California health benefit exchange.”
Employers Are Less Likely to Cut Hours
According to an analysis by Jackson Hewitt Tax Services, the one-year delay may make employers less likely to cut employee hours below 30 hours per week in order to classify them as part-time. With the one-year delay, some employers may postpone offering any coverage to dependents. Interestingly, this may have a positive effect on such families. First, children without an offer of employer-sponsored coverage may be eligible for the Children’s Health Insurance Program (CHIP) if they meet income and other eligibility requirements. They may also be eligible for the new premium assistance tax credits in 2014 even if the household income is above the state-specific CHIP limit. Employers may be more likely to cooperate with enrollment efforts to get uninsured employees and their uninsured dependents covered under various ACA programs because they know that they won’t face a penalty in 2014.
Less Pressure to Expand Medicaid
States may have less pressure from business interests to expand Medicaid. A Jackson Hewitt report estimates that employers would incur $876 million to $1.3 billion in penalties in 22 states that are refusing to expand their Medicaid programs. The delay in the mandate removes that penalty liability for 2014. However, employers in these states will face the penalties in 2015.
Health Exchanges Are Still on Track
Brian Haile of Jackson Hewitt said that the delay alleviates several key concerns among employers with a significant part-time and seasonal workforce. Regardless of the delay in the mandate, “We continue to expect the launch of the health insurance marketplaces on October 1, 2013,” he said.
President’s Motives Questioned
Mark Mazur, the Assistant Secretary for Tax Policy at the Treasury Dept. said the delay, “Will allow us to consider ways to simplify the new reporting requirements…Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”
Benjamin Domenech says that the delay in the employer mandate is simply an attempt to prevent the implementation of President Obama’s signature domestic policy until after the midterms. “He knows how unworkable his health policy overhaul is; he just doesn’t want to suffer the political consequences while in office. Congress passed the employer mandate into law, and the executive branch is now refusing to enforce it. This is nothing more than rule by regulators attempting to slow the train wreck until they’re out of power and don’t have to answer for their bureaucratic mismanagement.”
Consumers Want An Obamacare Health Insurance Waiver Too
Following the administration’s decision to delay the employer mandate penalty, 41% of consumers say that the same temporary waiver should apply to uninsured individuals, according to a survey from HealthPocket. The majority of adult Americans face penalties if they are uninsured. Fines are scheduled to take effect in 2014. The penalty for not being insured is intended to maximize the number of healthy people in the insurance pool, thereby lowering both insurers’ risk base and health insurance premiums. The 2014 fee for uninsured individuals is 1% of their annual income or $95, whichever is higher. The penalty increases annually until reaching $695 or 2.5% of annual income, whichever is highest. There is a cost-of-living adjustment after 2016 based. For more information, visit www.HealthPocket.com.
Verification of Exchange Eligibility Is Delayed
States that are running their own health exchanges now have until 2015 to verify that applicants to the exchange are eligible for health care benefits under the new law and do not already get affordable health insurance from their employer. Media Matters says that Fox News and The Wall Street Journal are stoking fears that a delay in the verification systems will lead to fraud. However, the government will conduct audits before implementing a stronger verification system and will levy heavy fines to people who misrepresent their eligibility.
On the July 8 edition of Fox & Friends, co-host Steve Doocy claimed the government won’t be able to verify whether you have the right income standards so they will simply have to trust people. Fox News host Bret Baier claimed that the government won’t check to see if anybody qualifies to get benefits. Co-host Gretchen Carlson said the program would be rife with fraud. A July 7 Wall Street Journal editorial claimed there could be as much as $250 billion in improper payments in the first decade of the program.
But an article in the Washington Post explains that the system includes safeguards against fraud. The full verification system is only delayed until 2015. Until then, the government will audit a statistically significant sample of consumers who appear to be underreporting their income. Anyone found lying will face a penalty of as much as $25,000 and be forced to pay back the extra subsidies. The Washington Post also noted that this honor system for health care reflects the one used by the Internal Revenue Service, “It is not unprecedented for the government to use the honor system in situations in which it collects data on millions of individuals,” said Timothy S. Jost, a law professor at Washington and Lee University in Lexington, Va. For example, people are expected to report their cash tips to the Internal Revenue Service as income. “An awful lot of the economy is a cash economy. If we had to verify every statement that was made to the IRS, our economy would collapse,” he added. For more information, visit http://mm4a.org.
The ACA Is Spurring the Captive Market
The number of captive insurance operations is expected to increase from 2013 to 2015. Many will be driven by the Affordable Care Act (ACA), according to Timetrics research. The ACA requires companies with over 50 full-time employees to make healthcare cover accessible at reasonable rates. With rates rising for this type of coverage from commercial insurers, companies are finding captives to be the more economical option. The ACA incentivizes hospitals and doctors to group together to offer quality healthcare at reasonable costs. To reduce insurance costs, these groups are increasingly establishing captives. Industries with the highest number of captives are financial institutions, healthcare service providers, retail and consumer product companies, and infrastructure companies.
Over nine-tenths of Fortune 500 companies already use captive insurance. There has been an increase in the number of medium-size companies with captive arrangements. Bermuda, the Cayman Islands, Guernsey, Luxembourg and the state of Vermont are leading destinations for setting up a captive. This is due to low taxes in captives, favorable foreign direct investment (FDI) regulations, availability of professional manpower, and the proximity to the main regions of operations of the parent companies. For more information, visit www.timetric.com.
Business Owners Are Not sure About How To Prepare For ObamaCare
Fifty-two percent of business owners don’t know how to prepare for healthcare reform changes. Of the remaining, 24% plan to reduce benefits; 13% plan to rebid their policy; and 11% plan to reduce business expenses, according to a study by Newtek Business Services. Barry Sloane of The Small Business Authority said, “Many small and independent business owners need to seek advice on how to apply for available tax credits. They have not yet calculated the benefits of purchasing insurance or paying the fine, in the form of a tax that may be required for an uninsured employee. There are many unanswered questions at this time for small business owners in an uncertain economy. The cost of healthcare, as well as the changes in plans and benefits are adding to the uncertainty in the economy,” he added. For more information, visit http://www.thesba.com.
Bill Would Expand HSAs & FSAs
Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) and Senator Marco Rubio (R-Fla.) introduced the Family and Retirement Health Investment Act of 2013 to strengthen and expand health savings accounts (HSAs) and flexible spending arrangements (FSAs). Companion legislation was introduced in the House by U.S. Rep. Erik Paulsen (R-Minn.).
Hatch, whose Committee has jurisdiction over health care policy said, “Over the years, these plans have grown in popularity, and it’s well past time Congress act to improve them. Streamlining these popular health care products…will provide millions of families, workers, and retirees the opportunity to put away tax-free savings to pay for their personal medical costs. It’s smart policy to increase access to quality and affordable health care for consumers at an affordable price and I hope to see this bill enacted into law.”
The legislation would do the following:
• Allow a husband and wife to make catch-up contributions to the same HSA.
• Remove the onerous new restrictions on the use of HSA and FSA dollars for the purchase of over-the-counter drugs.
• Clarify the use of prescription drugs as preventive care that will not be subject to an HSA-eligible plan deductible.
• Reauthorize the use of Medicaid health opportunity accounts.
• Promote wellness by expanding the definition of qualified medical expenses to encourage more exercise and better nutrition.
• Allow seniors enrolled in Medicare Part A to continue contributing to their HSAs.
• Allow for the purchase of low-premium health insurance and long-term care insurance with HSA dollars.
HSA Enrollment Reaches 15.5 Million
Nearly 15.5 million Americans are covered by health savings account (HSA)-eligible insurance plans — an increase of nearly 15% since last year, according to a census by America’s Health Insurance Plans (AHIP). The greatest enrollment increases are in the large group market, which represents nearly 70% of all enrollment in health savings account/high-deductible health plans (HSA/HDHPs) in 2013. This year’s census shows that enrollment in HSA plans has more than tripled over the past six years, from 4.5 million enrollees in January 2007 to 15.5 million in January 2013. Forty-nine percent of all HSA/HDHP enrollees in the individual market are 40 or over and 51% are under 40. States with the highest levels of HSA/HDHP enrollment are Illinois (903,000), Texas (889,364), California (808,019), Ohio (686,616), and Michigan (577,208). For more information, visit http://www.hsaalliance.org.
Medicare Lacks Cost Consistency
The cost of treating medical conditions for Medicare patients varies significantly, according to a study by a Center for Studying Health System Change (HSC). Most communities are relatively expensive in the treatment of some conditions and inexpensive in the treatment of others.
Industry observers have suggested that Medicare could reduce spending by as much as 30% if all providers adopted the same treatment patterns that are found in low-cost areas But the study indicates that patterns of geographic variation are far more complex. Researchers found that treatment costs for 10 medical conditions, including heart disease and bacterial lung infections, varied a great deal across communities. However, patterns of geographic cost variation were not consistent across conditions.
The health of the general population appears to be a much more important cost driver. In areas with high costs, the population tends to be sicker. Payment reform initiatives, such as patient-centered medical homes and accountable care organizations, may need to adopt flexible approaches to address local conditions and treatment patterns. For more information, visit www.hschange.com.
CMS Proposal Excludes Coverage for Alzheimer Diagnostic Tool
The Alzheimer’s Association released a statement expressing its disappointment that the Centers for Medicare & Medicaid Services (CMS) has made a preliminary decision to exclude Medicare coverage for brain amyloid imaging. The association said that the preliminary decision will hinder coverage of a badly needed, already FDA approved diagnostic tool. The tool enables patients to get earlier access to appropriate treatments, allows the family to build a care team and seek education and support services, enables enrollment in Alzheimer’s/dementia clinical trials, and provides an opportunity for the development of advance directives and financial planning. For more information, visit http://www.alz.org.
CMS Proposes Payment for Macular Degeneration Treatment
CMS has proposed to provide reimbursement for VisionCare’s Implantable Miniature Telescope in 2014. It’s the first FDA-approved ophthalmic telescope implant indicated to improve vision in patients with end-stage age-related macular degeneration. At present, the telescope implant procedure is reimbursed under a transitional pass-through payment mechanism that will expire on December 31, 2013.
CMS Says That Preferred Pharmacy Networks Save Money
CMS’ new Medicare Part D claims analysis confirms that negotiated prices at preferred pharmacies are lower than prices at non-preferred pharmacies. Pharmaceutical Care Management Association president and CEO Mark Merritt says that the savings are likely to be even greater since the government’s analysis did not consider increased savings from factors, such as premiums, reinsurance, and post point-of-sale price concessions, which determine CMS payments to preferred network plans.
Forty-nine out of 50 of the drugs examined by CMS had lower average negotiated prices at preferred pharmacies. Negotiated prices at preferred pharmacies, including mail-service pharmacies, are 3% lower for brands and 11% lower for generics, according to CMS. A recent report conducted by Avalere Health found that the top five Medicare Part D plans with the lowest average premiums have preferred pharmacy networks. Also, seven of the top 10 Part D plans with the lowest average premiums have preferred pharmacy networks. Also eighty-percent of seniors in plans with preferred pharmacy networks are satisfied, according to a survey by Hart Research Associates. Consumers cite lower costs and convenient access to pharmacies, among other benefits. Eighty percent of consumers in preferred pharmacy plans say they would be very upset if their plan were no longer available.
National PBM Coalition Is Launched
Pharmacy Choice and Access NOW (PCAN) launched a project to protect patients and pharmacies from what it says are unfair Medicare Part D audit practices from some pharmacy benefit management (PBM) companies. The project also highlights the need for federal legislation to address inconsistent and non-transparent reimbursement rates and tackle alleged improper use of patient information. “Without sufficient regulation or oversight, some PBMs have been largely playing by their own rules, engaging in questionable business practices that are hurting taxpayers as well as patients and their pharmacies. And it’s time for this to stop,” said Dennis F. Wiesner, a Texas pharmacist and spokesman for the coalition.
According to Wiesner, PBMs are the largely unregulated drug middlemen that manage prescription drug benefit programs for employers, unions, health plans, and other payers. They were created to help control the cost of drug coverage, but their business model is now primarily aimed at maximizing profits. All too often, this focus on profits has resulted in questionable conduct that has had a negative impact on community pharmacies and the patients they serve, he said. For more information, visit www.rxchoiceandaccess.com.
LONG TERM CARE
If You Live Long Enough, Needing Long-Term Care Is Practically Inevitable
Most people who live to their nineties will depend on someone else for their daily care or will have trouble walking short distances in the two years before their death, according to an article published print in the Journal of the American Medical Association.
“People are bombarded in the media with messages from people like Dr. Oz, saying that if you eat blueberries, go for walks, and play Scrabble, you will live to 100 and then die suddenly, never having experienced disability,” says lead author Alex Smith, MD, MPH, a physician at the San Francisco VA Medical Center. “Our results suggest that the overwhelming majority of those who live to their nineties will be dependent on someone else for daily activities like bathing or experience difficulty walking several blocks in their last two years of life.”
Researchers found that, two years before death, 50% of people who died in their nineties needed a caregiver’s help with basic daily activities like dressing, bathing, or eating. More than three quarters needed help in their last month of life. Regardless of the age at death, 69% had difficulty walking several blocks two years before death and 82% had difficulty climbing several flights of stairs.
Smith said, “This is what I see in my work caring for older adults…Things fall apart toward the end. Even those patients who make it to 90 in good health tend to experience disability and mobility impairment in their last months and years of life.” Smith added, “It’s a triple whammy for women. First, women live to older ages and are more likely to be disabled for that reason. Second, we found that independent of age, women are more likely to be disabled than men during the two years before death. This is likely because women are more prone to disabling health conditions and due to differences in body composition. And third, older men are more likely to have a spouse to care for them, but older women are likely to be widowed in their last years of life,” he explains. For more information, visit http://www.sanfrancisco.va.gov
EVENTS
Health Care Reform Seminar
LBL Group is hosting a health reform seminar on what employers need to know about health reform. It will be held July 31 in Long Beach, Calif. For more information, visit www.lblgroup.com/hcrseminar.
Health Care Consumerism Conference
The Institute for HealthCare Consumerism conference will be held December 5 to 6 at the Red Rock Casino Resort in Las Vegas. Super saver conference rates start at $99. For more information, visit www.theihccforum.com or contact Event Manager, Karen Raudabaugh at kraudabaugh@theihcc.com.