3 Compliance Areas for Self-Funded Employers (Video)

self-funded employer compliance

WATCH VIDEO NOW

“There are three primary areas that employers should keep in mind when thinking about compliance for their health plan,” said Brad Roehrenbeck, General Counsel and VP of Legal Services and Compliance at MedCost.

1. Employment Retirement Income Security Act 

“The first of those is the Employee Retirement Income Security Act of 1974 (ERISA), which governs employer-sponsored benefit plans. ERISA was a law created in the early 1970s that has been applied to basically set the rules for how an employer that creates their own health plan should do that.”

Michael Berwanger, Director of Quality Management and Compliance, agreed. “ERISA requires several things of plan sponsors and plan administrators. One of those things is to provide notices of what benefits are available to employees. The types of notices that you might expect with the summary plan document are any tax filing notices you might need to be aware of.

self-funded employer compliance“This is to make employees aware of the rights available to them under ERISA. And with the right service provider, employers can feel confident knowing they’re distributing the right notices in the right formats.

2. HIPAA Compliance

“The second area of compliance for self-funded employers is the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA requires that you safeguard patient data. Employers might find themselves subject to certain HIPAA rules; and with the right service provider, it could be relatively easy to navigate those waters.”

Keeping track of privacy obligations with documents that contain patient information is very important, said Brad Roehrenbeck. “Another thing that HIPAA requires is that anyone who handles that information, particularly if it’s electronic, must keep it secure. That basically means that you have to have systems in place that control who has access to that type of information, if you’re keeping it on your systems.

“HR directors want to make sure that they work with their IT departments to look at what kind of controls are in place, who has access to any folders where patient data is maintained, or anything else in relation to running the health plan. The HR department keeps that sensitive member information for the plan.

3. Internal Revenue Service Compliance

“The third primary area of the law that impacts health plans is tax laws. Like other types of benefit plans, health plans come with a tax benefit to both employees and employers. As dollars go in to support the plan, those dollars are provided on a tax-free basis.”

self-funded employer compliance“There are certainly tax advantages when you’re considering self-funding your health plan,” Michael Berwanger said. “To take advantage of those, you need to be aware of your compliance obligations -things like making sure you’re not discriminating unfairly in favor of your highly compensated employees.”

“There’s one other area of the tax laws that actually provides some additional benefit to employers and employees, and that is this concept of a Health Savings Account (HSA). Health savings accounts are a great vehicle under the tax laws where employees can set aside dollars and employers can contribute dollars on a tax-free basis. Those monies can be used toward deductibles and the payment of claims. Employees can keep that money for the rest of their lives or until such time as they need to use that for their medical expenses.

HSAs are a great asset for employees and a great savings vehicle. More importantly, it’s a great avenue for employers to engage with participants in the health plans to be conscious of where their health plan dollars are spent and to use them in a way that not only promotes their own health, but also the financial stability and viability and strength of both their dollars and the health plan dollars,” Mr. Roehrenbeck said.

self-funded employer compliance“As the markets continue to move towards a consumer-driven economy, it’s important for employees to be mindful of their options and how to best take advantage of the benefits available through their employers,” Mr. Berwanger noted.

“We find ourselves in a challenging environment. It’s important to be able to offer great incentives and great packages to employees. A self-funded health plan is a great opportunity to be able to do that.

“The risk can be worth the reward. Managing those compliance obligations isn’t as complicated as you might think, once you have a good trusted advisor to help you navigate that.”MedCost

(This post is a transcript from the video, “3 Compliance Areas for Self-Funded Employers.”)

 

 

5 Factors in Employer Prescription Drug Costs

Why are employer prescription drug costs spiraling higher every year?

“There are a combination of factors,” said Zafeira Sarrimanolis, PharmD, MedCost Pharmacist and Clinical Consultant. “This is a major problem for employers who do not want to make employees unhappy by instituting clinical pharmacy programs in their health plans.”

employer prescription drug costs


What Are the Factors in Employer Prescription Drug Costs?

  1. Manufacturer Price Hikes.

    Costs for drugs like EpiPen® and Humira® have been widely publicized.[i] Prices are escalating 16-17% per year. Manufacturers are also promoting new uses for existing high-cost drugs, even though there are already FDA-approved, lower-priced drugs for the same conditions already on the market.

  2. Increased Use of Prescription Drugs.

    The number of people taking cholesterol drugs is up from 6.5% (1999-2002) to 13.1% (2009-2012). Similar increases are seen in other common chronic conditions, including depression which increased 6.4% to 9.0% over the same period.[ii]

employer prescription drug costs

 

3.Specialty Drugs.

New, expensive medications for diseases such as cancer and multiple sclerosis are constantly hitting the market. Specialty drugs account for about 1% of total prescriptions but 35-45% of pharmacy spend, averaging $3,400 per drug per month.[iii]

4. Patent Expirations.

In 2016, Crestor, Zetia and Benicar all had patent expirations. The increased competition from generic equivalent drugs is decreasing costs across the board. Unfortunately for high-cost injectable medications like Humira, the introduction of generic versions is not as simple.

5. Advertising.

An estimated 80 drug commercials per hour are shown across TV outlets.employer prescription drug costs[iv] Radio, magazines, newspapers and social media also contain prescription drug ads that prompt individuals to ask doctors about specific drugs.

It’s an exciting time in the drug industry with the influx of new drugs coming on the market,” said Michael Cornwell, MedCost Director of Sales and Underwriting. “But it also presents challenges for us in the industry since controlling these costs is not always user-friendly.”

 

Employer Strategies for Controlling Prescription Drug Costs

 

Pharmacy Benefit Managers

Working with a Pharmacy Benefit Manager (PBM) supports cost management for employers in the pharmacy portion of their health plans. A PBM negotiates discounts and rebates from drug manufacturers, which are then returned back to the employer. PBMs also contract with pharmacies and process pharmacy claims.

The PBM controls pharmacy costs for employers through development of a preferred drug list (or formulary) and clinical programs. MedCost as a benefits administrator works closely with PBM partners to get the best rates for employers, customizing a pharmacy plan for each client’s unique population.

Formulary Management

Preferred drug lists are arranged in tiers, or cost levels, of generic, preferred and non-preferred medications. A PBM Pharmacy & Therapeutics Committee of industry experts follows a clinically-driven formulary decision-making process to define the preferred drug list. Some drugs are excluded from coverage in favor of clinically-similar alternatives that treat the same disease.

Exclusions can save as much as 15% of prescription drug costs in an employer’s health plan.

Prior Authorization

Prior authorizations require a doctor to provide additional clinical information to determine whether the health plan covers that drug. Employees, providers and health plan administrators dislike the inconvenience of waiting for approval of drugs. But this strategy is key to ensure that members take safe, clinically-appropriate and cost-effective drugs.

“There’s a human factor,” said Michael Cornwell. “We do not want to be disrupted in using familiar medicines. But employers cannot save money without these strategies.”

Step Therapy

Step therapy requires initial use of a lower-cost, clinically-similar drug for a medical condition, before a higher-cost drug for the same condition is covered by a health plan.

Summary

When 1% of prescriptions drive 40-45% of an employer’s pharmacy spend, avoiding wise management is no longer optional”, said Zafeira Sarrimanolis. “Part of my role as a MedCost Pharmacist is to emphasize the importance of cost-management strategies to our employers and consultants.”

“I also work closely with our clients to help employers understand the importance of educating their employees about these changes and why they are needed.”

“It’s all about making sure each employee gets the right drug for the right medical condition at the right time. That’s how we control pharmacy costs.MedCost

______________________________________________________________________________

[i] Brad Tuttle, “21 Incredibly Disturbing Facts about High Prescription Drug Prices,” Money Magazine, June 22, 2016, http://time.com/money/4377304/high-prescription-drug-prices-facts/ (accessed April 26, 2017).

[ii] “Health, United States, 2015,” National Center for Health Statistics, Centers for Disease Control and Prevention,   https://www.cdc.gov/nchs/data/hus/hus15.pdf#079 (2009-2012), (accessed April 26, 2017).

[iii] “The Growing Cost of Specialty Pharmacy – Is It Sustainable?” American Journal of Managed Care, February 18, 2013, http://www.ajmc.com/payer-perspectives/0213/the-growing-cost-of-specialty-pharmacyis-it-sustainable (accessed April 26, 2017).

[iv] “Prescription Drug Costs Remain Atop the Public’s National Health Care Agenda,” Kaiser Family Foundation, October 28, 2015, http://kff.org/health-costs/press-release/prescription-drug-costs-remain-atop-the-publics-national-health-care-agenda-well-ahead-of-affordable-care-act-revisions-and-repeal/ (accessed April 26, 2017).

IRS Announces 2017 FSA Limits

By Michael Berwanger, JD, Director, Quality Management & Compliance

The Internal Revenue Service recently announced the tax year 2017 annual inflation adjustments for more than 50 tax provisions.

Notably, for the first time in two years and consistent with industry expectations, the IRS has increased the dollar limitation under § 125(i) on voluntary employee salary reductions for contributions to health Flexible Spending Accounts (FSA) from $2,550 to $2,600.

The Revenue Procedure 2016-55 provides details about these annual adjustments. The tax year 2017 adjustments generally are used on tax returns filed in 2018.

2017 FSA

 

 

 

For guidance on FSAs, please review the IRS Frequently Asked Questions page.

 

To print this article, click on the title and scroll to “PRINT THIS PAGE” at the bottom.

5 More Tips for a Smooth Open Enrollment

open enrollmentDoes open enrollment for your Human Resources department seem like “Nightmare on Employment Street?” Our first post listed five practical tips to streamline the open enrollment period for annual benefits. Check out these five additional best practices to chase the confusion away:

 1. Make sure you provide all of the data requested by your claims administrator.

Inaccurate or incomplete data can result in time-consuming, frustrating mistakes. Remember to enter information exactly as provided in previous enrollments. Unique and accurate identifying information must be entered for each dependent.

 2. Collect waiver forms from your employees.

For ACA reporting and Department of Labor requirements, you as the employer need to keep proof of waived coverage on file. Here is a Compliance Assistance Guide from the U. S. Department of Labor that offers more information. MedCost provides our clients with a generic form as part of our benefits’ services, if clients do not have one.

3. If you submit updated enrollment data on paper forms or by spreadsheet, information on new hires, changes, and terminations is all that is needed.

It may seem counterintuitive, but full enrollment data is not required and can actually slow down the input process for your claims administrator.

Note: This does not apply to clients that electronically submit enrollment data via 834 transaction. 

4. When open enrollment is over, it’s over—no extensions.

health insurance noticesStick with the open enrollment deadline you set. Announce the deadline and remind employees of it several times during the open enrollment period. It is then the employees’ responsibility to complete the required enrollment process by the deadline. Remember, open enrollment is a finite time period, not an ongoing process.

5. Once you’ve collected enrollment data, submit it all at one time.

Submitting information piecemeal or in multiple spreadsheets that have to be merged or compared to previous submissions only increases the chance for errors. Avoid confusion with one complete submission of enrollment data.

Don’t let your open enrollment become a nightmare. Competent claims administrators can help advise you of all compliance requirements and deadlines. And turn your nightmares into sweet dreams.MedCost

5 Key Definitions in Health Plans

How many of the terms in this example below do your employees understand? If you’re getting blank stares over words like “co-insurance” and “out-of-pocket limit,” it’s time to educate your staff before open enrollment starts for the next plan year.

definitions health plans

Source: Centers for Medicaid & Medicare Services

 

Five Key Terms

Only 12% of American adults have a basic understanding of the terms used in their health plans.[i] As more health plans are transitioning to some type of Consumer-Driven Health Plan (CDHP), it is more vital than ever for employees to understand basic terms that identify their responsibilities for payment.

Here are five easy definitions for HR professionals to use when explaining your company health plan:

  1. Deductible

The amount an employee owes for health care services before the health indefinitions health planssurance or plan begins to pay. For example, if a deductible is $1,500 as in Jane’s example above, the plan won’t pay anything until a $1,500 deductible for covered health care services is met. The deductible may not apply to all services.[ii]

2. Co-payment

A fixed amount (e.g., $25) that an employee pays for a covered health care service, usually when service is received. The amount can vary by the type of covered health care service. Co-payments are more familiar in traditional plans such as Preferred Provider Organizations (PPOs).

3. Network

The facilities, providers and suppliers your health plan has contracted with to provide health care services. So in-network services or providers have already negotiated a billing rate that would be applied.

Out-of-network charges are usually more expensive, because no rate has been contracted with that doctor’s office or provider.

4. Out-of-Pocket Limitemployee deductibles

The most an employee pays during a policy period (usually a year). This limit usually includes deductibles, copays and/or co-insurance. Premiums, balance-billed charges or health care not specified in the plan would not be included.

5. Co-insurance

An employee’s share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service.

In the example above, after Jane met her deductible ($1,500), her plan began to pay 80% of qualified health expenses. Jane’s part of the payment (co-insurance) was 20%, paid until Jane’s total expenses for the year hit her $5,000 out-of-pocket limit.

After Jane had paid a total of $5,000, her plan paid all other expenses for the rest of the plan year.

 

Equip Your Employeesdefinitions health plans

As HR departments approach a new year, health plan terms may still sound like a language most employees don’t know. Equip your employees to make decisions they will feel good about so they can better manage those vital health care dollars.MedCost

 

 

[i] Quick Guide to Health Literacy Fact Sheet,http://health.gov/communication/literacy/quickguide/factsbasic.htm (accessed September 13, 2016)

[ii] Centers for Medicare & Medicaid Services https://www.cms.gov/CCIIO/resources/files/downloads/uniform-glossary-final.pdf (accessed September 13, 2016)

 

To print this article, click on the title and scroll to “PRINT THIS PAGE” at the bottom.

Employee Deductibles Rise Faster Than Wages

ks110111-medEmployer health insurance expenses continued to rise by relatively low amounts this year, aided by moderate increases in total medical spending but also by workers taking a greater share of the costs, new research shows.

Average premiums for employer-sponsored family coverage rose 3.4% for 2016, down from annual increases of nearly twice that much before 2011 and double digits in the early 2000s, according to a survey by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

But 3.4% is still faster than recent economic growth, which determines the country’s long-run ability to afford health care.

And the tame premium increases obscure out-of-pocket costs that are being loaded on employees in the form of higher deductibles and copayments. Another new study suggests those shifts have prompted workers and their families to use substantially fewer medical services.

For the first time in Kaiser’s annual survey, more than half the workers in plans covering a single person face a deductible of at least $1,000. Deductibles for family plans are typically even higher.

Deductibles are what consumers pay out of pocket before the insurance kicks in. Employers sometimes contribute to pre-tax accounts to help workers pay such costs.

Employers have been flocking to high-deductible plans in recent years, arguing that exposure to medical costs makes consumers better shoppers.wingeddollar-sm

It also saves employers money. Having workers pay more out of pocket shaved half a percentage point off premium increases of employer-sponsored plans in each of the past two years, Kaiser researchers calculated.

Since 2011, the average deductible for single coverage has soared 63%, according to the survey, while workers’ earnings have gone up by only 11%.

Microsoft PowerPoint - 20160825 Cumulative Slides [Read-Only]

 

 

(Kaiser Health News, Jay Hancock and Shefali Luthra, September 14, 2016)

 

The Life-Saving Resource Ignored After Heart Attacks

childrens hospital readmissionsCHARLOTTESVILLE, Va. — Mario Oikonomides credits a massive heart attack when he was 38 for sparking his love of exercise, which he says helped keep him out of the hospital for decades after.

While recovering, he did something that only a small percentage of patients do: He signed up for a medically supervised cardiac rehabilitation program where he learned about exercise, diet and prescription drugs.

“I had never exercised before,” said Oikonomides, 69, who says he enjoyed it so much he stayed active after finishing the program.

Despite evidence showing such programs substantially cut the risk of dying from another cardiac problem, improve quality of life and lower costs, fewer than one-third of patients whose conditions qualify for the rehab actually participate. Various studies show women and minorities, especially African Americans, have the lowest participation rates.

“Frankly, I’m a little discouraged by the lack of attention,” said Brian Contos, who has studied the programs for the Advisory Board, a consulting firm used by hospitals and other medical providers.

ManWithHeartNow, though, advocates say cardiac rehab may gain traction, partly because the federal health care law puts hospitals on a financial hook for penalties if patients are readmitted after cardiac problems. Studies have shown that patients’ participation in cardiac rehab cut hospital readmissions by nearly a third and saved money.

The law also creates incentives for hospitals, physicians and other medical providers to work together to better coordinate care.MedCost

(Kaiser Health News, Julie Appleby, August 31, 2016)

KHN

 

 

To print this article, click on the title and scroll to “PRINT THIS PAGE” at the bottom.

The Employer Benefit First Offered by NASA

The first place this employer benefit was offered wasn’t even on planet Earth.telemedicine employers

The idea to assess human health from afar started with NASA in the early 1960’s. Both American and Russian doctors were concerned that astronauts might lose circulation and other functions in space. The first telemedicine was practiced on animals attached to medical monitors while orbiting Earth.

TV viewers became familiar with live updates on astronauts’ heart rates, breathing and temperature during space flights. And the technology has translated right into employer benefit plans for medical care for onsite and offsite workers.

Over 15 million Americans obtained medical care remotely in 2015,[i] and the American Telemedicine Association anticipates 30% growth in 2016. Employers have picked up on the cost savings and convenience—nearly 75% of large employers plan to offer telemedicine as a health plan benefit in states that regulate this method, up from 48% in 2015.[ii]

telemedicine employers

Why Telemedicine?

Employers are searching for ways to contain the spiraling costs of health care. The ability for employees to make a call or have a video conference with a board-certified doctor within minutes brings both convenience and less time away from work. A recent analysis by Willis Towers Watch estimated that as much as $6 billion per year could be saved by U. S. companies using telemedicine.[iii]

Where the Savings Come From

Employers are seeing the need to educate employees about the best medical options for every health need. Some fevers, headaches, sore throats and other minor symptoms are appropriate for a telemed call (see “Treatment Alternatives to the Emergency Room”). Average cost: $45.

Compare the cost of a telemed call with an average primary care doctor visit: $145. Or the average cost of an ER visit: $1,316. [iv] Your employees with commutes to work may have to travel longer distances for in-person visits—time also lost in productivity. And many employees allow conditions to worsen before seeking treatment, resulting in even higher expense and time away from work.

“Over 400 million visits a year are appropriate
for telehealth.”

 – Jason Gorevic, Teladoc CEO, NJTV News

Managing Costs in a Complex Environment

As responsibility for paying health bills shifts to the employee, 24/7 services such as Teladoc becometelemedicine employers an increasingly attractive option for appropriate levels of medical care. A board-certified doctor is always available with a cell phone callback, even if an employee is on vacation or lives in a rural area where medical access is more limited.

MedCost clients who use Teladoc have already saved hundreds of thousands of dollars in 2016, avoiding more expensive treatment centers and lost hours at work.

Looming in employers’ minds is the Affordable Care Act’s Cadillac tax, now postponed until 2020. This 40% excise tax would trigger when an employer offers health benefits above $10,200 for an individual and $27,500 for a family.

Employers have already begun to raise employee deductibles and out-of-pocket costs, not included in the value of a health policy.

Summary

Some large employers such as JetBlue Airways are installing telemed kiosks at their workplaces, harnessing technology innovations for immediate care.[v] The Department of Veteran Affairs provided telemedicine employerstelemed services to more than 675,000 veterans in fiscal 2015. Employees who are used to searching for restaurants and shopping deals on cell phones will increasingly call a doctor to get routine medical care.

And it won’t even require a trip to outer space to get it.

 

[i] Melinda Beck, “How Telemedicine Is Transforming Health Care, Wall Street Journal, June 27, 2016, http://www.wsj.com/articles/how-telemedicine-is-transforming-health-care-1466993402 (accessed July 14, 2016)

[ii] National Business Group on Health, “Health Care Benefits Cost Increases to Hold Steady in 2016,” August 12, 2015, https://www.businessgrouphealth.org/pressroom/pressRelease.cfm?ID=263 (accessed July 18, 2016)

[iii] Willis Towers Watson, “Current Telemedicine Technology Could Mean Big Savings,” August 11, 2014, https://www.towerswatson.com/en-US/Press/2014/08/current-telemedicine-technology-could-mean-big-savings (accessed July 15, 2016)

[iv] Sabrina Rodak, “Study: 71% of ED Visits Unnecessary, Avoidable,” Becker’s Hospital Review, April 25, 2013, http://www.beckershospitalreview.com/capacity-management/study-71-of-ed-visits-unnecessary-avoidable.html (accessed February 23, 2016)

[v] Phil Galewitz, “Kaiser: Your Doctor Will See You Now,” June 20, 2016, http://www.usatoday.com/story/news/2016/06/18/kaiser-how-far-telemedicine-has-come/86084092/ (accessed July 18, 2016)

How to Turn Health Care Data into Dollars

Is your company one of the growing numbers of US employers using health care data to manage expenses?

Just as employers keep a close watch on profit and loss columns, the same analysis is now available for companies’ health care costs. Big data is increasingly driving improved, better coordinated care to improve employee health while managing spiraling expenses.

We know this is a complicated topic (just like health care). That’s why we’re offering a free white paper examining the role of big data in health care and how employers can achieve true quality, cost-effective outcomes.

Between 1999 and 2015, employer-sponsored health premiums rose 203%.[i] Managing employee health costs is becoming more and more difficult every year.

Big data compiles massive amounts of data from multiple sources, yielding key metrics and predictive analytics for health care providers. Providers can then leverage this into interventions that provide high quality, cost-effective care. And employers who receive regular reports on trends can work with a benefits administrator to better manage those costs while supporting employee health outcomes.

Jane’s Story

diabetic, advanced analytics, big dataHere’s an example of how MedCost applies this analysis. Jane,* a 42-year old female member with moderately-controlled diabetes, has health benefits through her job. Jane’s biannual visit to her Primary Care Physician (PCP) documents her routine lab work, prescriptions and referrals for preventive screenings.

Between PCP visits, this diabetic member gets the flu, causing severe increases in blood glucose levels. When Jane goes to the Emergency Room, the ER doctor increases her medication dosage. After she goes home, Jane’s personal blood glucose meter shows an alarming drop in her blood sugar levels. Jane calls her PCP, who adjusts her dosage to prevent more complications. Jane’s next checkup is planned in six months.

Was all the data communicated from the hospital’s electronic records, the lab vendor’s system, payer claims and her home monitoring glucose meter? Will the PCP be able to verify that Jane actually obtained her preventive mammogram or flu vaccine prescribed before the ER visit?

At MedCost, Jane’s case would be carefully monitored by her nurse health coach. If there is an issue, her nurse health coach would follow up.

white paper

Chronic illnesses like Jane’s need expert support to prevent worse outcomes and resulting higher costs. And advanced analytics can now identify patients and populations at risk for developing certain conditions prior to the actual onset of illness.

 The white paper, Transforming Data into Dollars, offers an understanding of factors influencing the need for advanced analytics solutions, including an example using the MedCost Care Management programs.

Here are other insights from the white paper:

BENEFITS OF ADVANCED ANALYTICS  
   
1.     Accurate Reporting Normalized measures based on industry-accepted tools of evaluation yield best results for your employees.
2.     Maximized Outcomes Your company will rate higher on the Analytics Sophistication Scale and outperform industry peers.
3.     Healthier Employees Potential risk for developing conditions can be identified and prevented.
4.     Lower Costs Wise management of expenses creates a sustainable long-term cost trend.

  We’ve identified high-risk employees, improved health results and minimized costly hospital visits using precise data analysis in a sample case study that illustrates these key benefits. Download our white paper to learn how.

white paper

*Actual patient data not used.

[i] “Recent Trends in Employer-Sponsored Health Insurance Premiums,” Kaiser Family Foundation, January 5, 2016, http://kff.org/infographic/visualizing-health-policy-recent-trends-in-employer-sponsored-health-insurance-premiums/ (accessed June 16, 2016).

To print this article, click on the title and scroll to “PRINT THIS PAGE” at the bottom.