Narrow Networks...Healthcare Buyers Beware!

In the current, post Affordable Care Act (ACA) world, the term - “narrow network” – is often heard, and at times, is a strategy deployed by employers and insurers.  There are a variety of other ways to describe narrow networks, such as - carve out network; exclusive provider network; select network; tiered network…you get the idea.  From a covered member's standpoint, this strategy involves limiting the number of contracted providers plan members can seek care from, and in return, receive the best benefits, and lowest out of pocket costs.  From the standpoint of the insurer or employer, narrow networks mitigate risk and reduce expenses.  Readers who have been around the healthcare scene since the eighties might recall the original introduction of narrow networks, albeit presented at the time as “HMO Lite”;  “a PPO/HMO hybrid”; or more commonly –  “exclusive provider organization”, replete with its very own acronym  - EPO! 

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The ACA and Newton's 3rd Law of Motion

Sir Isaac Newton’s Third Law of Motion taught us that “for every action, there is an equal and opposite reaction”.  As we near the end of the fourth full year of the [partial] roll out of The Affordable Care Act /Obamacare, it has become increasingly more challenging for people to differentiate “action” from the “equal and opposite reaction”.  Put another way, some of the things we’re experiencing, required by the ACA, are directly attributable to the law itself (call these “actions”).  And then there are things we’re seeing that are the result of the many requirements, mandates, fees/taxes, expansions associated with the ACA (call these “equal and opposite reactions”).   This will all make more sense when you see the chart at the end of this article.

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Ebola ~ Just the Facts

Readers of this blog (soon to be "resource library") typically find health INSURANCE, FUNDING, and FINANCING issues addressed here.  But occasionally, health CARE issues come to light which I feel compelled to address.  With all the media coverage and confusion surrounding the recent outbreak of the Ebola virus, I decided to attempt to clarify some important facts.  My primary source of information for this post is the Douglas County Health Department (Douglas County, Nebraska), which under the direction of Dr. Adi Pour, does a fantastic job of data mining and educating, among other things.  (See http://www.douglascountyhealth.com )

The Ebola virus was first discovered in 1976 in the Ebola River, which is located in a region of Africa now known as the Democratic Republic of the Congo in lower, central Africa.  Although the virus has been found in several African countries since its initial outbreak, as of the time of this blog post, there are four (4) countries in the western region that have experienced outbreaks - Guinea, Liberia, Nigeria, and Sierra Leone.  The current, 2014 outbreak is the largest in history, and the first to occur in west Africa.

Perhaps the most misunderstood, and in some instances, incorrectly reported aspect of Ebola, is how it is spread.  It is NOT spread via air or water, but rather through direct contact with someone who: a. is infected with the virus; and b. is also experiencing symptoms.  Clearly health care workers are at the greatest risk of contracting the virus, as evidenced by the recent reporting infected health care workers in Dallas, TX. The U.S. Centers for Disease Control and Prevention (CDC) are taking very deliberate and focused measures to mitigate, if not prevent Ebola and for that matter all infectious diseases, from arriving and spreading throughout the U.S.

IMPORTANT: CDC Director - Thomas Friedan - specifically addressed rumors relative to the ability of the Ebola virus to spread through the air, which have actually "fueled" the rumor mill.
On 10/7/14, he said:
"The rate of change [with Ebola] is slower than most viruses, and most viruses don't change how they spread.  That is not to say it's impossible that it could change [to become airborne].  That would be the worst-case scenario.  We would know that by looking at...what is happening in Africa.  That is why we have scientists from the CDC on the ground tracking that."

In addition to how the Ebola is (and is not) spread, here are some of the more relevant and pertinent facts concerning Ebola, gleaned from the aforementioned source:

• An individual that recovers from being infected can no longer spread the virus.  However, the virus can survive for up to three months in semen.
• Only mammals have shown the propensity to be infected with, and spread, Ebola.  Specifically at this point in time - humans, apes, monkeys, and bats.  Mosquito's and other insects, at this point, are not able to transmit the Ebola virus.
• The CDC and the U.S. Fish and Wildlife Service have specific protocols in place to prevent the Ebola virus from coming into the U.S. via non-human primates and bats.  The greater challenge, as we now know, is dealing with humans arriving on U.S. soil, who have contracted the virus.
• The CDC is working with all U.S. hospitals on establishing and implementing the proper infection control measures to control the continued spread of the Ebola virus.
• Since all U.S. citizens have the right to return to the U.S. for treatment of any contacted disease/disorder, we simply can not completely prevent infected citizens from re-entering the country.  For this reason, the CDC has taken specific and deliberate actions, including raising the travel alert level to Level 3 (i.e., travelers incur high risk of traveling to the four identified, west African countries, and are advised against nonessential travel to those locations).
• The CDC's Emergency Operations Center (EOC) has been activated to assist with the coordination, communication, monitoring, and management of this current challenge.

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ACA's Transitional Reinsurance Fee/Tax

Self funded health plans face a rapidly approaching compliance deadline of January 15, 2015 relative to the Affordable Care Act's so called "transitional reinsurance fee".  A previous post addressed the various reinsurance (or bailout) programs devised in the ACA (click - http://sstevenshealthcare.blogspot.com/2014/01/acas-insurance-company-bailouts.html). 
These programs are sometimes referred to as the "Three R's", which are:

1. Reinsurance Program
2. Risk Corridor
3. Risk Adjustment

The first of these reinsurance/bailout programs - the [temporary] reinsurance program - is funded by virtually ALL health insurance plans (e.g., individual, group, fully insured, self funded) through the assessment of a fee/tax.  Fully insured plans owe the tax, but do not have to worry about counting/collecting/remitting.  Self funded plans however, are responsible for all of the aforementioned.  So, here's the scoop on determining the amount of your organization's tax, along with when, and how to submit it....

For 2014, the amount of the transitional reinsurance fee is $63 per covered MEMBER, per year (PM/PY). Note that this breaks down to $5.25 per member, per month. Also note the term "member" includes ALL covered members of the plan...employee, spouse, and children. In 2015 the amount reduces to $44 PM/PY, and the estimated amount for 2016 is $25-$30 PM/PY.  

IMPORTANT: Affected employers are required to report the number of covered/affected member lives by NOVEMBER 15, 2014 via - https://pay.gov/public/home
Training sessions designed to assist employers are being offered/provided by CMS through November 15, 2014.  To find out more about these sessions, click - https://www.regtap.info/

Affected employers have the option of paying their 2014 fee in installments, or in a lump sum.  If the later, the required amount is due no later than January 15, 2015.  If the former, the first installment (of $52.50 PM/PY) is due no later than January 15, 2015; and the second installment (of $10.50 PM/PY) is due no later than November 15, 2015.

The ACA's regulations allow for a variety of methods to determine each affected employers PM/PY fee.  The simplest of these methods is the so called "snapshot method".   Using this method, the average number of covered members on which to base the fee is found by adding the total number of covered employees on January 1, April 1, and July 1 of each year, dividing that number by three, and multiplying by the appropriate fee amount.  For example, for 2014:

• Lump Sum: January 1: 75 members + April 1: 80 members + July 1: 90 members = 245/3 = 82 x $63 = $5,166 transitional reinsurance fee due by January 15, 2015.
• Installment: January 1: 75 members + April 1: 80 members + July 1: 90 members = 245/3 = 82 x $52.50 = $4,305 transitional reinsurance fee installment no. 1, due by January 15, 2015.  January 1: 75 members + April 1: 80 members + July 1: 90 members = 245/3 = 82 x $10.50 = $861 transitional reinsurance fee installment no. 2, due by November 15, 2015.

The federal government promises a "streamlined membership and contribution" process, through which employer's remit their transitional reinsurance fee.  A dedicated website (click - https://pay.gov/public/home) provides a secure, web based portal employers use to report and submit their required tax.  

For a more detailed overview of the transitional reinsurance fee, and the process of remitting the required fee/tax, click here - http://www.cigna.com/assets/docs/about-cigna/informed-on-reform/reinsurance-assessment-fact-sheet.pdf

 

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ACA's Health Plan Identifier Requirement

As the old saying goes, "the devil is in the details", and the Affordable Care Act (ACA) has its fair share of DETAILS.  Among the rapidly approaching compliance deadlines for many employers is requesting/obtaining a ten-digit Health Plan Identifier or HPID.   While ALL employers offering health insurance plans must comply with this requirement, the due date for obtaining the ID, along with determining who is responsible for obtaining it varies based on a couple of factors.  Here's an overview of the whole HPID matter...

To access the complete article, click - https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

Open Enrollment Best Practices

As we approach the labor day holiday, human resources officials, brokers, consultants, and others begin to think not as much about the end of summer, but rather, the approaching OPEN ENROLLMENT SEASON!  Before we know it, that special time of the year will be upon us.  Having been involved with so many open enrollments over the years, as an insurance company executive, third party administrator, wholesaler, consultant, and retailer/broker, I have accumulated some insight as to what employees/enrollees should be considering during this important time of the year.  Call these my "open enrollment best practices", or, put another way, the things enrollees/employees should consider as they enter open enrollment season...

1. When reviewing health insurance options (and for that matter, dental, vision, life insurance, etc.), always annualize the premium amounts presented/offered.  Most of the time, the employee/enrollee is going to be enrolled for a full, 12 month period, so it just makes sense to look at financial responsibility on an annual basis.  Plus, plan related deductibles and out of pocket accumulations generally refresh after a period of 12 months.
2. Consider ALL available health insurance options.  It might turn out that coverage offered by a particular employer to a particular employee may not be the best option.  There are other options worthy of consideration, such as:
• Spouse's employer plan
• Medicare (with associated supplemental coverage(s)/Medicare Advantage
• Individual coverage purchased on the private market
• Individual coverage purchased on the public exchange/marketplace
• Veteran's Administration
• Tricare
3. Don't just focus on one aspect of the coverage (e.g., copays for office visits, the deductible, the coinsurance percentage, etc.).  Rather, tally up the entire OUT OF POCKET expense of the option(s), and consider the plan(s) that make the most sense for the individual and/or families health care needs.  If the individual/family uses little to no health care services, the plan offering with the lowest premium makes more sense.  Alternatively, the individual/family that uses a fair amount of health care services should consider the plan with the lowest potential out of pocket limit.  Ask if there's a decision support tool available which helps employees make a more informed decision of coverage based on their historical use of health care services.  
4. Take into account the offering of dollars to be used for health care expenses that insurance doesn't cover, or for use meeting deductible/copay/coinsurance obligations.  Sometimes employers offer/fund/provide dollars in multiple spending arrangements.  These usually end in the letter "A", as in HSA...FSA...HRA.
5. Inquire into stipends and assessments that may apply, based on enrollment decisions.  Some employers offer an opt-out or waiver stipend (either post tax, or tax-free through a Flex plan) if an employee opts to waive the coverage offered.  On the flip side, some employers require an assessment (in addition to the premium cost share) for covering a spouse who has coverage available through their employer.  These additional amounts of dollars are significant factors in making open enrollment decisions.
6. If a wellness incentive is offered, it's very important to understand what the requirements are, in addition to the associated rewards/penalties.  There are a myriad different wellness programs being offered, with untold ways of incentivizing (or penalizing!) employees.  Some wellness programs require very little, yet yield a high reward (e.g., premium reduction, HSA contribution, cash reward, etc.).  Others require much, yet provide a marginally small incentive.
7. Many employers offer their employees the opportunity to pay their portion of the premium for health, dental, and vision coverage with pre-tax dollars through a Flex plan (sometimes called a "section 125 plan", or a "cafeteria plan").  This is a great way for employees to reduce their tax obligation, but enrollees need to know that if they take advantage of this offer, they are committed to remaining enrolled in the plans they are paying for with pre-tax dollars, for the entire 12 month period of the Flex plan.  The only way to dis-enroll earlier is to experience a qualifying event.
8. Speaking of Flex plans (and previously, HSA (health savings account) and HRA (health reimbursement arrangement)), these arrangements/accounts offer enrollees outstanding tax benefits, along with the means to pay for lower cost health care.  Employees/enrollees should consider the use of tax preferred dollars available to them in one or more of these "A's", and take full advantage.  Many times I see employees offered both an HSA and a Limited Purpose FSA, and either or both are completely ignored...BY HIGH UTILIZERS!

Have a wonderful Labor Day Holiday...and an even better OPEN ENROLLMENT SEASON!

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ACA Employer Reporting...Continued

A previous post informed about an upcoming (voluntary in 2015; mandatory in 2016) Affordable Care Act (ACA) compliance requirement requiring employers (small and large) and health insurers to report on health insurance coverage offered to employees. 
(See - http://sstevenshealthcare.blogspot.com/2014/03/aca-employer-reporting-requirements.html )

Recently the IRS released draft versions of various forms that employers will need to disclose detailed information to both their employees and the IRS.  The purpose of the reporting is to assist the federal government in enforcing the ACA's individual mandate, employer mandate, and premium subsidy provisions.

To access the complete article, click - https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx