Vouchers for Healthcare Have Arrived!

The "consumerization" of healthcare continues with the advent of a relatively new concept - prepaid healthcare!  A company called - MDsave - is making headlines with their prepaid voucher concept for healthcare, which strongly resembles travel sites like Orbitz, Kayak, Expedia, and Travelocity.
See - https://www.mdsave.com/

Founded in 2014, and recently making its way to my adopted hometown of Omaha, NE, MDsave is focused primarily on meeting the needs of three (3) disparate healthcare market segments:

1. The uninsured;
2. Insured consumers with coverage having high deductible/out of pocket limitations; and
3. Consumers whose health insurer/payer denies a particular healthcare service(s).

The technology behind MDsave allows consumers to view available healthcare services in their vicinity (e.g., MRI, colonoscopy, mammogram, blood test, etc.), compare prices, and purchase vouchers which cover the entire, bundled cost of the particular service/procedure.  For example, a complex procedure such as a bariatric bypass would involve services and fees for the physician consult, psychiatric evaluation, hospital/facility charge, lab fees, and anesthesia.  A voucher purchased for this procedure would cover all of the associated charges in one bundle.

Here's what you can expect to see when using MDsave to shop for an MRI in Omaha, NE...

Healthcare providers can afford to discount services offered through MDsave because of the elimination of administrative costs associated with billing and collection.  And of course, the competition in markets for healthcare consumers leads to downward pricing pressure.  The vouchers don't expire within a set timeframe, so if a consumer doesn't use their voucher, the value of the purchased voucher is returned to their account for future use.

As of the time of this writing,  MDsave has agreements with 202 hospitals in 29 states; and partners with eight of the ten largest healthcare systems in the U.S.  I would expect MDsave to grow exponentially as health care/insurance stakeholders continue to seek ways to reduce costs and improve the patient experience.

(Note:In Omaha, NE, only one of our three healthcare systems - CHI Health - currently participates with  MDsave.)

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CDH Employer Best Practices

Since the arrival of high deductible health insurance plans (HDHP) coupled with tax preferred spending accounts (SA) on to the employee benefits scene nearly 22 years ago, a number of "best practices" have emerged to assist employers and brokers/consultants in deploying them. These types of plans, often referred to as "consumer driven health" plans...or CDH, have five (5) specific employer best practices I have developed for successful introduction/open enrollment of such plans.
(Note: The three (3) prevailing tax preferred spending accounts typically coupled with high deductible plans, are Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA), and Health Savings Accounts (HSA).)

Here are my employer best practices for introduction and open enrollment of CDH plans...

1.       Generous/Attractive HDHP plan design - if coupling with an HSA, the ideal plan design consists of deductible only, no coinsurance or post deductible copays.  If coupling with an HRA, there are more design considerations relative to copays and coinsurance.

2.       Competitive/generous employer contribution amounts - In order to mitigate the relatively higher exposure associated with higher deductible plans, ideally employers provide some level of funding in the spending account(s).  As a point of reference, the 2017 national annual average for HSA contribution amounts was $608 for single coverage, $1,086 for family coverage*.  (Note: the 2019 maximum allowable HSA contribution amounts are $3,500 (single coverage); $7,000 (family coverage). 
      Since unused HRA allocations can return in part or whole to the employer, HRA amounts tend to be higher than the aforementioned HSA amounts, which remain with the employee whether spent or not. (Note: 2017 HRA averages were $1,351 single/$2,44 family*.)

3.       Employee education/engagement on the HDHP/Spending Account  - employees need to understand how the HDHP operates, how the spending account complements the insurance plan(s), and most importantly, how to maximize use of the healthcare system and keep more money in their pocket!.  These sessions can be done on a group, individual, or combination basis.

4.       Reputable/low cost HSA custodian and/or third party administrator - almost every bank and credit union in the U.S. offers some type of HSA offering, and there are TPAs aplenty to do FSA and/or HRA administration.  Some are better, and less expensive, than others, so it pays to shop and compare service providers.

5.       Meaningful (at least 25%) premium differential between the HDHP/Spending Account option(s) and any available traditional/copay plan option(s) - if the HDHP/SA plan is offered in conjunction with other, traditional/copay plans, it's best to have a lower employee premium contribution for the HDHP/SA option(s) to incentivize take up rates.

* Source: Kaiser Family Foundation; Average Annual Employer Contributions to HSA and HRA accounts, 2017

CDH plans have been in existence for nearly 22 years, and we have plenty of data to support the contention that these types of plans save employers and employees money!  And when coupled with a partially self-funded arrangement at the employer level, the realized savings remain with the employer.  If you're not sure if your organization is "CDH ready", here's a readiness checklist to assist you - https://sstevenshealthcare.blogspot.com/2013/11/is-your-company-cdh-ready.html

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Cigna Express Scripts Merger APPROVED

The United States Department of Justice (DOJ) has given the necessary approval of Cigna's acquisition of pharmacy benefit manager (PBM) - Express Scripts.  The $52 billion deal will result in a consolidated healthcare behemoth that some say, is in reaction to recent healthcare sector entrant - Amazon.  Another large scale healthcare acquisition/merger - CVS/Caremark and Aetna - is currently under DOJ review, but is expected to be approved soon, in a $69 billion transaction.  The Cigna/Express Scripts transaction is scheduled to be completed by the end of 2018.

Previously (2007) CVS acquired PBM - Caremark - in a $21 billion deal; and in 2015, health insurance giant United Healthcare purchased PBM - CatamaranRx - at the time the 4th largest PBM in existence, and folded it into their OptumRx subsidiary.  Clearly, there's something to the consolidation of health insurers (or payers) and PBM's, which began prior to Amazon's foray into healthcare, and the more recent announcement of the establishment of the yet to be named "Amazon/Berkshire Hathaway/JP Morgan/Chase healthcare coalition".

If you're not familiar with what/who PBM's are, they are third party administrators of prescription drug programs for a variety of health insurance plan types including commercial plans, self-insured, Medicare Part D, state government plans, and the Federal Employees Health Benefits Program (FEHBP).  In effect, the PBM's process the transaction of prescription drug purchases that are initiated by a patient/consumer at a pharmacy (retail and/or mail order), according to the insurer/payors guidelines and protocols.  Importantly, PBM's also negotiate discounts and rebates from drug makers, and facilitate the so called formularies that determine patients drug costs, tiers, access, etc., for those with insurance through the aforementioned payor types.

While there are a number of relatively smaller/nimble PBM's in existence (e.g., Magellan Rx Management, WelldyneRx, CastiaRx), the largest in recent memory have been Caremark, CatamaranRx, OptumRx, and Express Scripts.  With Cigna's purchase of Express Scripts, and the pending approval of CVS/Caremarks' purchase of Aetna, the 4 largest PBM's will be integrated units of large health insurance companies.  It will be interesting to see how the 36 Blue Cross Blue Shield Association plans throughout the country adapt to being the only major health insurer that contracts out it's pharmacy benefit management.  I would also expect to see further acquisition and merger activity among the assortment of existing PBM's.

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Reference Based Pricing

Among the strategies being deployed by benefits brokers/consultants, on behalf of employers feeling squeezed by ever increasing health insurance costs is REFERENCE - BASED PRICING (RBP).  Variances in the price of healthcare can be as much (or even more) as 500% for the same services...with little to no difference in quality.  Don't believe me?  See for yourself using - Healthcare Bluebook!
Click - https://www.healthcarebluebook.com/ui/consumerfront?SearchTerms=mri

I used the tool to discover the variance in cost for an MRI in my adopted hometown of Omaha, NE, to be 10-fold!  On the low end - $501...on the high end...$5,048!  (Note: I know of a facility in town that will do an MRI for as low as $350).

Rather than rely on a Preferred Provider Organizations (PPO) or Health Maintenance Organizations (HMO) contracted rate of reimbursement (or fee schedule), some self funded employers are setting their fee schedules for certain care based on a much lower price point...and one that is defensible.  There are many upsides to RBP, including:

• freedom of provider choice for insured members
• transparency of true healthcare costs for insured members
• significantly lower claims costs for employers
• claim advocacy for members that are balance billed by their provider

RBP operates off the premise that healthcare providers shouldn't charge different patients (or customers) different prices for the exact same service or set of services, based solely on how the patient pays the bill (e.g., cash pay, private insurance, government coverage like Medicare, Medicaid, Tricare, etc.).  So an example of a typical RBP model might set reimbursement rates for care at some defined percentage of the Medicare reimbursement rate.  

One example I've seen uses 150% of Medicare reimbursement rates for physician care; and 175% for facility services.  Such a relatively lower, RBP reimbursement schedule, compared against a PPO or HMO negotiated rate could be 75% less, or more!  The savings could be considerable to an employer, and again, covered employees and their dependents would have complete freedom of choice of provider, without the limits of a network.  But there is a drawback, which can be dicey to say the least.  If a provider refuses to accept the RBP rate of reimbursement, and balance bills the patient, a dispute emerges.  Fortunately there are vendors that can mediate, negotiate, and ameliorate on behalf of the patient, to reach an agreed upon reimbursement amount.  If an agreement can not be reached, litigation can ensue.

IMPORTANT: The first known RBP lawsuit has emerged, and is currently pending in a Virginia circuit court, after having been remanded back down from the state's supreme court.  A decision  could define the future of RBP (see Glenn Dennis vs. Memorial Hospital of Martinsville & Henry County).  The crux of the dispute lies in the difference between what the hospital charged for services provided to Mr. Dennis - $111,115 - and the amount Mr. Dennis' employer's self funded plan allowed for said services - $27,254, a 300% difference!  

Stay tuned...or rather...we will...and will let our readers and clients know the outcome!

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HSA Updates for 2019

Last month (May, 2018) the IRS issued its anticipated 2019 calendar year, inflation adjusted figures affecting Health Savings Accounts (HSAs), and the associated/required qualified High Deductible Health Plans (HDHPs).  Changed figures for 2019 are indicated in red in the chart that follows; along with the current (2018) and prior (2017) year's limits.

	2017	2018	2019
HDHP MINIMUM DEDUCTIBLE
Individual	$1,300	$1,350	$1,350
Family	$2,600	$2,700	$2,700
HDHP OUT-OF-POCKET MAXIMUM
Individual	$6,550	$6,650	$6,750
Family	$13,100	$13,300	$13,500
HSA MAXIMUM CONTRIBUTION
Individual	$3,400	$3,450	$3,500
Family	$6,750	$6,900	$7,000
CATCH-UP CONTRIBUTIONS (age 55 and older)	$1,000	$1,000	$1,000

Readers interested in an overview of HSAs and HDHPs can click on the following link - 

http://sstevenshealthcare.blogspot.com/2013/10/health-savings-accounts-hsas.html

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Wellness Program Alert!

If your organization offers, or is in the process of considering a Wellness Program...HOLD THE PHONE!  There is pending litigation involving the American Association of Retired Persons (AARP) and the U.S. Equal Employment Opportunity Commission (EEOC) that could profoundly alter the regulatory and compliance requirements associated with certain Wellness Programs. Generally speaking, the rules and regulations affecting Wellness Programs, apply to those defined as "health contingent" and "outcome based".
See - http://sstevenshealthcare.blogspot.com/2013/06/wellness-programs-and-affordable-care.html

At present, there are a myriad of rules, agencies and regulations that regulate certain Wellness Programs, including:

• Health Insurance Portability and Accountability Act (HIPAA) - prohibits discrimination in premiums or plan eligibility based on health-related factors, but offers exceptions to certain wellness programs.
• Affordable Care Act (ACA) - expanded HIPAA exceptions to allow for up to a 30% incentive/penalty for wellness program participation; and 50% for tobacco use.
• Americans with Disabilities Act (ADA) - generally does not allow discrimination, within a wellness program, based on disability*.
• Genetic Information Nondiscrimination Act (GINA) - generally does not allow wellness programs to use genetic information to discriminate participants*.

* In July of 2016, the EEOC released regulations allowing for the use of both ADA and GINA protected information by wellness programs. The regulations, which took effect 1/1/2017, established that employers could request otherwise ADA/GINA protected data, provided there was no more than a 30% incentive/penalty; and the related disclosures by program participants was not involuntarily provided.

At the heart of the disagreement between AARP and the EEOC is whether a wellness program can be construed as voluntary (versus involuntary).  Despite the EEOC's efforts to clarify the impact of both the ADA and GINA's impact on wellness programs through issued regulations, AARP contended that "the EEOC failed to adequately establish that a 30% incentive does not render a wellness program involuntary".  The Washington, D.C. based District Court agreed with AARP, and granted a judgment ordering the EEOC to vacate their regulations and submit a notice of proposed rule making (by 8/31/2018), and file a status report by 3/30/18.  On 3/30/3018, the EEOC reported it had yet to promulgate new regulations, blaming a delay in Senate confirmation of its new Chair and Commissioner.  (Note: As of the date of this blog post, these confirmations were still pending.)

So, as of the writing of this blog post, the court order for the EEOC to vacate their wellness program related regulations, effective 1/1/2019, remains intact.  All of this leaves affected employers, offering or considering offering health contingent/outcome based wellness programs, with five (5) options:

1. If your Wellness Program involves answering health related questions (e.g. a health risk assessment) or medical testing (e.g., venipuncture/biometric screening), discontinue these practices.

2. Continue following the EEOC regulations (affecting incentive limits, providing separate wellness program notices, etc.), knowing these regulations have been ordered to be vacated effective 1/1/19.

3. Disregard the EEOC regulations and instead defer to the less restrictive HIPAA regulations and ACA amendments that followed.

4. If not currently offering a wellness program, postpone until the 2020 plan year; although there are  no assurances this matter will be resolved by then. 

5.  Establish a totally voluntary, non-outcome based wellness program that is not subject to the aforementioned regulations.

Affected organizations might consider consulting with their wellness program vendor, insurance carrier, third party administrator, benefits attorney, etc. for guidance, as situations, programs, rules, etc. vary significantly.

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IRS Reinstates 2018 Family Contribution Limit

As the old saying goes - "the more things change...the more they remain the same"!  A little more than a month ago, we shared the news that the IRS had reduced the previously announced, 2018 family Health Savings Account (HSA) contribution limit by $50 (from $6,900 to $6,850).
See - http://sstevenshealthcare.blogspot.com/2018/03/o-n-march-5-2018-irs-issued-bulletin.html

This "middle of the game" change was fraught with challenges and potential fines for unsuspecting HSA  taxpayers!  Apparently the hue and cry of the affected was great enough to cause the IRS to change course, and revert back to the previously announced HSA contribution limit, for those with family coverage, of $6,900.

The long and short of this guidance is that for 2018 - ANY POTENTIAL TAX PENALTIES FOR CONTRIBUTING MORE THAN $6,850, BUT LESS THAN $6,901 HAVE BEEN REMOVED FOR THOSE WITH QUALIFYING FAMILY COVERAGE.

Importantly, taxpayers that have made a correction to what was previously an excess contribution can:

• Do nothing and maintain their corrected, maximum contribution of $6,850; or
• Contribute the additional $50 that the IRS is now allowing.

To access the "revised revision" (IR-2018-107), click - https://www.irs.gov/newsroom/irs-grants-relief-for-taxpayers-affected-by-reduction-of-maximum-deductible-health-savings-account-contributions

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