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20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
20100922 nccbh avalere employer webinar final
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20100922 nccbh avalere employer webinar final

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  • 1. Healthcare Reform: Implications for Community Behavioral Health Organizations as Employers www.TheNationalCouncil.org
  • 2. Agenda > Audience poll > Introduction > Current Status of Employer Healthcare Coverage > Health Insurance Provisions in the Affordable Care Act > Health Reform Impact on Employers > Retiree Health Benefits > Implications > Opportunities and Threats 2 www.TheNationalCouncil.org
  • 3. Audience Poll Question #1 • How many employees does your organization have? a) Fewer than 20 b) Between 20 and 50 c) Between 50 and 200 d) More th 200 M than 3 www.TheNationalCouncil.org
  • 4. Audience Poll Question #2 • Do you currently offer your retirees company-sponsored health insurance? a) Yes b) No 4 www.TheNationalCouncil.org
  • 5. Audience Poll Question #3 • Are you considering dropping health insurance as a benefit for your employees? a) Yes, the costs are too high b) Yes, they will have access to health insurance from the government due to reform c) No, I consider it a core benefit d) Unsure/haven’t considered it e) Don’t currently offer employees health insurance ) ’ ff 5 www.TheNationalCouncil.org
  • 6. Avalere Health, LLC > Avalere Health delivers research, analysis, insight & strategy to leaders in healthcare policy and business > 130+ policy and industry experts with backgrounds in government, academia and research organizations managed care, industry and healthcare delivery organizations, care delivery, financial services and professional societies > Capabilities in policy analysis, modeling & scoring, evidence reviews, data analytics, due diligence, qualitative research and market strategy > Research published b l di f R h bli h d by leading foundations and j d ti d journals l 6 www.TheNationalCouncil.org
  • 7. Bonnie Washington > Bonnie Washington, Senior Vice President, provides clients with strategic policy advice on a wide range of issues including Medicare policy development, health reform, and commercial strategy. Bonnie has particular expertise in the Medicare prescription drug benefit, Medicare Advantage, and pharmaceutical and health plan issues. > Prior to joining Avalere, Bonnie led health policy development efforts for Novartis Pharmaceuticals Avalere Corporation and Ovations, a UnitedHealth Group Company. Prior to her industry experience, Bonnie led the Office of Legislation at the Centers for Medicare & Medicaid Services, formerly known as the Health Care Financing Administration. Specifically, Bonnie advised and represented the CMS administrator on legislation and policy related to Medicare, Medicaid, and the State Children s Children's Health Insurance Program (SCHIP) She also represented the administration before (SCHIP). members of Congress and congressional staff. Previously, Bonnie served as an analyst with the Office of Management and Budget (OMB), advising OMB and White House policy officials on Medicaid and SCHIP policy options. > Bonnie holds a B.A. from Loyola College in Maryland and a M.Sc. from the London School of Economics. 7 www.TheNationalCouncil.org
  • 8. Eric Hammelman > Eric Hammelman, Director, provides data-driven analysis of the impact of various legislative and policy changes on the healthcare industry, with a specific focus on reimbursement for providers. > Prior to joining Avalere, Eric was an Associate Analyst with JPMorgan, where he analyzed healthcare service companies and provided investment advice to institutional investors. He built financial and industry models for hospitals nursing homes dialysis hospice ambulatory surgery hospitals, homes, dialysis, hospice, centers, clinical labs, inpatient rehab, long-term acute care, and physician groups. He also analyzed payment policies for each of these areas, including Medicare, Medicaid, and private payers. > Eric has a Bachelors of Music Performance from the University of Illinois at Urbana-Champaign. He l H also earned an M B A f d M.B.A. from th M h ll S h l of B i the Marshall School f Business (U i (University of S th it f Southern C lif i ) California), as well as a Masters of Music Performance from the Mannes College of Music in New York, N.Y. Eric is also a CFA charterholder. 8 www.TheNationalCouncil.org
  • 9. Current St t of E l C t Status f Employer Healthcare Coverage www.TheNationalCouncil.org 9
  • 10. Percent of Employers Offering Health Benefits Has Declined Slightly Overall In the Last Decade Percent of Employers Offering Health Benefits, 1999-2009 80% 70% 69% 68% 66% 66% 66% 63% 63% 60% 61% 60% 60% 60% 50% 40% 30% 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 www.TheNationalCouncil.org Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2009 10
  • 11. Small Employers Are Less Likely To Offer Health Benefits Than Large Employers Percent of Employers Offering Health Benefits by Size, 2009 Size 100% 95% 98% 87% 80% 72% % 60% 46% 40% 20% 0% 3 - 9 Employees 10 - 24 25 - 49 50+ 200+ Employees Employees Employees Employees In 2009, 64 percent of employers with a small number of low-wage workers offered health benefits, compared to 39 percent of employers with a large number of low-wage workers. www.TheNationalCouncil.org Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2009 11
  • 12. Higher Healthcare Costs Are Driving Increases in Employer-Sponsored Insurance Premiums Average Annual Premium for Single and Family Coverage, 1999-2009 1999 2009 2009 $13,375 Drivers of Increasing $4,824 Healthcare Costs remiums 2008 $12,680 $4,704 2007 $12,106 $4,479 General Inflation 2006 $11,480 $11 480 Healt Insurance Pr $4,242 2005 $4,024 $10,880 Improvements in 2004 $3,695 $9,950 Technology 2003 $9,068 $3,383 Increased Utilization th 2002 $8,003 $3,083 2001 $7,061 $2,689 Cost-Shifting 2000 $6,438 $2,471 1999 $2,196 $5,791 Lifestyle Choices $- $ $2,000 $ $4,000 $ $6,000 $ $8,000 $ $10,000 $ $12,000 $ $14,000 $ $16,000 $ Family Coverage Single Coverage The average annual family premium in 2009 is 34 percent higher than in 2004, and 131 percent higher than in 1999. www.TheNationalCouncil.org Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009 12
  • 13. Health I H lth Insurance Provisions in the P i i i th Affordable Care Act www.TheNationalCouncil.org 13
  • 14. While Some Employer Requirements Begin in 2010, Major Requirements and Penalties Begin in 2014 Insurance Market Reforms Coverage of Exchanges Begin Preventive Operations Services MLR requirements q Employer Elimination of Wellness Program Eliminate Penalties Lifetime and Incentives Deduction of Certain Annual Part D Retiree Auto-Enrollment Limits Increase Tax on Subsidy HSA Withdrawal S t da a Annual Reporting for Nonqualified Notice of Requirement Dependent Expenses Coverage Coverage Under Age 26 Options Tax on High- Free Choice cost Insurance Eliminate Vouchers Plans Reimbursement Limit Retiree on OTCs for Contributions Reinsurance Annual Fee on Spending S di to FSAs Program Health Plans Accounts 2010 2011 2012 2013 2014 2015 2016 2017 2018 www.TheNationalCouncil.org FPL= Federal Poverty Level OTC= Over-the-counter (medication) 14
  • 15. A Number of Insurance Reforms Take Effect in 2010: Most Significant Reforms Effective in 2014 2010 Provisions 2014 Provisions Requires all plans to issue and renew Prohibits pre-existing condition exclusions coverage to those seeking it, regardless of for children under 19 years old pre-existing conditions. Prohibits health plans from placing lifetime Requires modified community rating g limits on the dollar value of coverage Prior to 2014, allows plans to only impose annual limits on the dollar value of Prohibits plans from placing annual limits coverage as determined by the Health and on the dollar value of coverage Human Services Secretary Fully insured plans will also be required to maintain a Medical Loss Ratio of 85 percent in large group and 80 percent in small group markets, starting in 2011 Medical Loss Ratio: the ratio of total losses paid out in claims plus www.TheNationalCouncil.org adjustment expenses divided by the total earned premiums. 15
  • 16. Legislation “Grandfathers” Existing Plans • Allows existing employer-sponsored and other insurance plans that were in effect on the employer sponsored date of enactment to remain essentially the same. • Exempts these plans from complying with many of the insurance rules included in the legislation • “Grandfathered” l “G df th d” plans will h ill have t comply with some new requirements b t not all h lth to l ith i t but t ll health reform provisions will apply. • Family members and new employees are permitted to enroll in grandfathered plans • A plan must continue to p p provide the same treatment for mental health conditions and substance use disorder that it currently offers. • Dropping any portion of the treatment currently offered would result in the plan being treated as having eliminated all or substantially all benefits for that condition. www.TheNationalCouncil.org 16
  • 17. A Number of Insurance Reforms Take Effect in 2010; Most Apply to Grandfathered Plans Applies to 2010 Provisions Grandfathered Plans Prohibits pre-existing condition exclusions for children under 19 years old. * Prohibits health plans from rescinding coverage except in the case of fraud. p g g p Prohibits health plans from placing lifetime limits on the dollar value of coverage. Prior to 2014, allows plans to only impose annual limits on the dollar value of * coverage as determined by the Secretary. Requires coverage of d R i f dependents up t age 26 d t to 26. * Eliminates cost-sharing for covered preventive services. Services include those with a USPSTF A or B rating; immunizations recommended by ACIP, children’s services in the HRSA guidelines, and women’s preventive services in the HRSA guidelines. guidelines Prohibits limitations on waiting periods. Prohibits employers from limiting coverage eligibility based on employee salary. *Only applies to grandfathered group plans. www.TheNationalCouncil.org USPSTF = U.S. Preventative Services Task Force; ACIP = Advisory Committee on Immunization Practices; HRSA = Health Resources and Services Administration 17
  • 18. In Order to Maintain Grandfathered Status, Employer Plans Must Deviate from Current Cost Shifting Trend • In recent years employer plans have shifted costs to employees years, • However, in order to maintain grandfathered status, employer plans must limit increases in cost-sharing • Permitted increases in cost-sharing are tied to medical inflation • Co-insurance percentages cannot increase Sample Impact of Grandfather Rules on Tier 2 Cost-Sharing for Prescription Drugs Grandfathered status exempts ESI Trend Pre-Reform e eo plans from some requirements in the Tier 2 Rx Cost- ACA. However, Sharing ($) CMS projects that Permitted Growth for 39-69 percent of all Grandfathered Plans existing employer plans will loose grandfathered status by 2013. ACA Signed into Law, Law March 23 ESI = Employer-Sponsored Insurance; Sample cost-sharing scenario based on actual average Tier 2 cost-sharing for www.TheNationalCouncil.org employer sponsored coverage from 2000-2009 as reported by the KFF and HRET 2009 employer health benefits survey. Grandfathered plan limits based on historical medical inflation for 2001-2009. 18
  • 19. Tax Credits for Small Employers Also Begin in 2010 Provision Details Tax Credits for Provides sliding scale tax credit to certain small employers with fewer Small Employers than 25 employees and average annual wages below $50,000 who offer and contribute at least 50% of the cost of their employees’ health employees insurance coverage. Full credit given to employers of ≤10 and average annual wages less than $25,000. Credit offered to small employers that newly begin offering coverage. Credit continues through the first two years in which coverage is offered. www.TheNationalCouncil.org 19
  • 20. MLR Requirements Effective January 1, 2011* Impacts Insurance Reforms Grandfathered Plans Requires all plans, excluding self-insured, to report the proportion of premium dollars spent on non claims costs Requires 85% MLR in large group market and 80% MLR in the small group and non-group market d k t Requires plans to give rebates to enrollees for the amount in which the proportion of premium dollars spent on claims costs (minus reimbursement for clinical services; activities that improve q p quality; and, y other non-claims cost) is less than 85% for group plans and 80% for small group and individual plans MLR = medical loss ratio; *NAIC is required to give their recommendations by Dec 31, 2010. www.TheNationalCouncil.org MLR requirements go into effect for plan years beginning six months after enactment. NAIC is currently aiming to send recommendations to the HHS Secretary by July 2010. 20
  • 21. Changes to HSAs and FSAs Begin in 2011 and 2013 Provision Details HSA Penalties for Increases the additional tax for HSA withdrawals prior to age 65 that Non-Qualified are used for purposes other than qualified medical expenses from Expenses 10% to 20% beginning January 1, 2011 The additional tax for Archer Medical Savings Account withdrawals not used for qualified medical expenses would increase from 15% to 20% beginning January 1, 2011 Reimbursement Eliminates reimbursement for over-the-counter medications from for OTCs HSAs, FSAs, or HRAs beginning in 2011 Limit FSA Limits tax deductible contributions to health flexible spending tax-deductible contributions arrangements to $2,500 per employee, per year beginning in 2013 HSA = health savings account www.TheNationalCouncil.org FSA = flexible spending account HRA = health reimbursement account 21
  • 22. Employers Also Face New Notification Reporting Requirements in 2011 and 2013 Provision Details Reporting Cost of Requires employers to report the aggregate value of medical benefits, Coverage on W 2 C W-2 dental, i i d t l vision, and supplemental i d l t l insurance coverage on th each the h employee’s Form W-2 beginning January 1, 2011 Notice of No later than March 1 2013 requires employers to provide a written 1, 2013, Coverage Options notice to all employees informing employees about the new exchanges and related rules www.TheNationalCouncil.org 22
  • 23. Wellness Program Incentives Begin in 2013 Provision P i i Details D t il Wellness Allows employers to reduce premiums by up to 30 percent to reward Program employee participation in wellness programs Incentives » The Secretary may increase the available reward to up to 50 percent if deemed appropriate Some employers already have this kind of program in place y y g » Alabama State Employees’ Insurance Board www.TheNationalCouncil.org 23
  • 24. Major Insurance Reforms Begin in 2014 Impacts I t Grandfathered Insurance Reforms Plans Requires all plans to issue and renew coverage to those seeking it, regardless of pre-existing conditions. * Prohibits insurers from dropping or denying coverage for individuals participating in approved clinical trials. Requires modified community rating allowing insurers to vary premiums based only on geography; family composition; age, variation limited to 3:1; and, tobacco use, variation limited to 1.5:1. Prohibits individual and group plans from placing annual limits on the dollar value of coverage. Plans may apply annual or lifetime per beneficiary limits to any non-essential health benefits. Requires plans to meet minimum coverage requirements for the essential benefit package. Sets out-of-pocket limits on cost sharing at HSA levels ($5,950 in 2010 for individuals). *Based on current law www.TheNationalCouncil.org 24
  • 25. State Exchanges Create New Market in 2014 Provision Details Establishing State Requires each state to establish an exchange for individual market Exchanges and separately for small group market by 2014 Allows states to form regional or interstate exchanges subject to exchanges, approval by Secretary Employer Requires states to allow small businesses with up to 100 employees to Eligibility purchase coverage through the small employer exchange » States may allow employers with more than 100 employees into the state exchange in 2017 » F plan years b f For l before J January 1, 2016 a state may limit the small 1 2016, t t li it th ll group market to 50 employees www.TheNationalCouncil.org 25
  • 26. Employer Coverage and Auto-Enrollment Requirements Begin in 2014 Provision Details Employer Sets penalties, effective December 31, 2013, as follows: Mandate » F employers that offer coverage, fee will be lesser of For l th t ff f ill b l f $3,000/employee receiving tax credit or $2,000/full-time worker » For employers that do not offer coverage, fee will be $2,000/ full-time full time worker » For purposes of calculating total penalty, number of full-time employees is reduced by 30 Auto-Enrollment Requires employers with 200 employees or more to auto-enroll employees in employer coverage, but allows employees to opt out if they can show proof of other coverage www.TheNationalCouncil.org 26
  • 27. New Administrative Requirements and Insurer Fees Take Effect in 2014 Provision Details Annual Fee on Imposes an annual fee for all U.S. health insurance providers phased Health Plans in from $8 billion in 2014 to $14.3 in billion per year in 2018, distributed among insurers by relative market share » Increases fee from the preceding year by the rate of premium growth » Excludes self-insured plans » Excludes 50 percent of net premiums for non-profit plans www.TheNationalCouncil.org 27
  • 28. Excise Tax on High Cost Health Plans Begins in 2018 Provision Details Excise Tax on High Imposes an excise tax on employer health insurance plans that offer policies with Cost Health Plans generous levels of coverage, effective 2018 » The tax would be levied on group health insurance plans as well as plan administrators f self-insured companies d i i t t for lf i d i Tax is equal to 40% of the plan’s value that exceeds $10,200 for an individual and $27,000 for family coverage, beginning in 2018 Threshold will increase beginning in 2019 by the cost-of-living adjustment plus 1% cost of living Imposes a penalty for employers that under-report excise tax liability to insurers » The penalty is equal to the difference between the actual and reported liability amount, plus interest from the date the tax was due to the date paid by the employer l www.TheNationalCouncil.org 28
  • 29. Reform Impacts Employers Differently Depending on Group Size and Current Plan Offerings New Plans Grandfathered Plans Provisions Effective Date Individual 1-100 100+ Self-funded Individual Group Plan Small employer tax credits 2010 *** MLR requirements 1/1/2011 Employer penalties 12/31/2013 New benefit requirements 1/1/2014 ** Annual fees on health plans 1/1/2014 Employer participation in the exchange 1/1/2014 * ** Wellness prevention program initiatives 1/1/2011 Unclear Current Current Guaranteed issue requirements 1/1/2014 law law Tax on high cost plans 1/1/2018 *Prior to 2016, a state may limit the small group market to 50 employees. www.TheNationalCouncil.org ** Beginning in 2017, states may allow employers with more than 100 employees into the state exchange ***Applies to employers with 25 or fewer workers 29
  • 30. Health Reform Impact on Employers www.TheNationalCouncil.org 30
  • 31. Primary Impacts of Health Reform on Employers Employer Mandate 1 Requires certain e p oye s to o e health co e age for equ es ce ta employers offer ea t coverage o employees Health Insurance Exchanges 2 Allows some employers to enroll employees in Exchange plans Insurance Market Reforms 3 Requires all commercial health plans to comply with new rules q p py Essential Benefit Requirements 4 Requires small group health plans to offer minimum requirements Taxes and Fees 5 Imposes new taxes and fees on select health plans and employers www.TheNationalCouncil.org 31
  • 32. Certain Employers Must Offer Health Coverage for Employees Employer Mandate Auto-Enrollment Starting in 2014, most employer groups Requires employers with 200 employees must offer coverage or face penalties or more to auto-enroll employees in Penalties are as follows: employer coverage l • Employers offering coverage but who Allows employees to opt out if they can have at least one employee receiving show proof of other coverage a tax credit subsidy to purchase Exchange coverage fee will be lesser coverage, of $3,000/employee receiving tax credit or $2,000/full-time worker • For employers that do not offer coverage, fee will be $2,000/ g , , full-time worker www.TheNationalCouncil.org 32
  • 33. Employer Mandate Applies to Both Fully-Insured and Self- Funded Employer Plans Employer Plans Provision Fully-Insured Fully-Insured Self-funded 1-100* 100+ Imposes a penalty on employers that do not offer coverage and/or have at least one employee receiving a tax credit. * Requires employers with 200 employees or more to auto-enroll employees in employer coverage, but allows employees to opt out if ** they can show proof of other coverage www.TheNationalCouncil.org * Over 50 full-time equivalents (accounts for part-time employees) ** Over 200 employees 33
  • 34. State-level Insurance Exchanges Will Be a Major Vehicle for Expanding Access in 2014, Even for Some Employers Health Plans Consumers States must create separate exchanges for All U.S. residents are eligible to participate individuals and primarily small employers Individuals must purchase some form of Qualified health benefit plans must cover coverage or face financial penalties specified set of services, including prescription Premium subsidies available for some drugs, mental health benefits and substance consumers; limit premiums to a percent of use income i Establishes four tiers of benefit design based on Employers face a penalty if they do not offer actuarial value coverage to workers www.TheNationalCouncil.org 34
  • 35. Self-Funded Employer Plans Restricted from Participation in Exchanges Employer Plans Provision Fully-Insured Fully-Insured Self-funded 1-100* 100+** Allows small employers to enroll employees in health plans offered in state-based Exchanges www.TheNationalCouncil.org *For plan years before January 1, 2016, a state may limit the small group market to 50 employees **Reform only applies to larger groups if state allows into the exchange starting in 2017 35
  • 36. New Requirements Affect Nearly Every Type of Employer Employer Plans Provision Fully-Insured Fully-Insured Effective date Self funded Self-funded 1-100 1 100 100+ 100 Prohibits pre-existing condition exclusions for children under 19 years old 9/23/2010 Prior to 2014, allows plans to only impose annual limits on the dollar value of coverage as determined 9/23/2010 by the Secretary Prohibits individual and group health plans from placing lifetime limits on the dollar value of 9/23/2010 coverage Requires 85% MLR in large g p market and 80% q g group MLR in the small group and non-group market 1/1/2011 Requires all plans to issue coverage to those seeking it, regardless of pre-existing conditions 1/1/2014 Requires modified community rating allowing insurers to vary premiums only by age gender age, gender, 1/1/2014 tobacco use, and geographic area. Prohibits individual and group plans from placing annual limits on the dollar value of coverage 1/1/2014 MLR: Medical loss ratio. The percent of premiums spent on medical costs www.TheNationalCouncil.org 36
  • 37. Most Fully-Insured Health Plans Must Also Cover Essential Benefits Provision Details Effective Date Benefit Requirements Ambulatory patient services Prescription drugs 2014 Emergency services Laboratory services Hospitalization Preventive and wellness services and Mental health and substance chronic di h i disease management t abuse services Maternity and newborn care Rehabilitative and habilitative Pediatric services services and devices Employer Plans Provision Fully-Insured Fully-Insured Self-funded 1-100 100+ Plans must meet minimum coverage requirements * ** (for essential benefit package) www.TheNationalCouncil.org *For plan years before January 1, 2016, a state may limit the small group market in the Exchange to >50 employees; ** Reform only applies to large groups participating in the Exchange (at the discretion of the state starting in 2017) 37
  • 38. Both Fully-Insured and Self-Funded Plans Must Cover Select Preventive Services Employer Plans Provision Fully-Insured Fully-Insured Self-funded 1-100 100+ Coverage of and elimination of cost sharing for preventive services with an A or B rating by the USPSTF While the ACA requires coverage of certain services, there is still great uncertainty around how to cover these preventive services. www.TheNationalCouncil.org 38
  • 39. ACA Requires Coverage and Eliminates Copays for Over Twenty Select Preventive Services Provision USPSTF Recommendations Priorities Coverage of Screening for: Phenylketonuria Counseling for and elimination Abdominal aortic aneurysm Rh incompatibility (24-28 weeks tobacco use: adults of cost sharing gestation) and pregnant women Anemia for preventive Aspirin to prevent Bacteriuria Syphilis services cardiovascular recommended Blood pressure Visual acuity in children disease by the U.S. b th U S Breast cancer (mammography) Counseling f C li for: Screening for blood Preventive Alcohol misuse Cervical cancer pressure Services Task Chlamydial infection BCRA gene screening Screening for Force (USPSTF); Cholesterol abnormalities Breast feeding cholesterol requirement Diet abnormalities Colorectal cancer depends on Obesity Screening for Depression grandfathered depression Diabetes Sexually transmitted infections status Screening for Gonorreha: women Tobacco use: adults and pregnant colorectal cancer woman Hearing loss Aspirin to prevent cardiovascular disease Hemo-globinopathies Chemoprevention of breast cancer p Hepatitis B Chemoprevention of dental caries HIV Supplementation with folic acid Congenital hypothroidism Prophylactic medication for gonorrhea: Obesity newborns Osteoporosis Iron supplementation in children www.TheNationalCouncil.org 39
  • 40. Both Fully-Insured and Self-Funded Employer Plans Subject to Excise, or “Cadillac,” Tax in 2018 Employer Plans Provision Fully-Insured Fully-Insured Self-funded 1-100 100+ Imposes an excise tax on employer health insurance plans that offer policies with generous levels of coverage Imposes a a ua flat fee (c a g g in poses an annual at ee (changing each subsequent year) on the health insurance sector Requires employers to disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual Form W-2 www.TheNationalCouncil.org 40
  • 41. CBO Assumes Employer Coverage After Health Reform Remains Relatively Stable Individuals with Employer Coverage as Primary Source (in millions) CBO discusses three separate trends in employer coverage: 180 162 159 150 Plus 6 - 7 million people due to 160 140 individual mandate 120 Minus 8 - 9 million other people who 100 would lose offer of ESI 80 60 Minus 1 - 2 million people who would 40 get coverage through the exchanges 20 0 2010 2019 w/out 2019 w/ ACA ACA Congressional Budget Office, letter to the Honorable Nancy Pelosi, providing a preliminary analysis of the Manager’s www.TheNationalCouncil.org Amendment to the reconciliation proposal, March 20, 2010. http://www.cbo.gov/ftpdocs/113xx/doc11379/Manager'sAmendmenttoReconciliationProposal.pdf 41
  • 42. Retiree Health Benefits 42 www.TheNationalCouncil.org
  • 43. Percent of Large Employers* Offering Coverage to Retirees Has Dropped Significantly in Past 20 Years 80% Percent of Large Employers Offering Retiree Coverage 1988 2009 Coverage, 1988-2009 66% 60% 46% 40% 40% 40% 38% 40% 37% 36% 35% 36% 36% 35% 33% 33% 31% 29% 20% 0% 1988 1991 1993 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Large employers are much more likely to offer retiree health benefits than small employers. In 2009, only five percent of employers with fewer than 200 workers offered coverage to retirees. www.TheNationalCouncil.org Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2009 *Graph shows employers with at least 200 workers that offer health benefits to active workers. 43
  • 44. Legislation Attempts to Slow Decline in Retiree Coverage by Implementing Reinsurance Program Provision Details Reinsurance for Establishes a $5B temporary reinsurance program to reimburse Retirees R ti employer-based plans f b l b d l for benefits provided t retirees ages 55 64 fit id d to ti 55-64 from 2010-2014 Reimbursement provided for 80% of the cost of benefits per enrollee in excess of $15 000 and below $90 000 $15,000 $90,000 Could provide funding to offset spending on high-cost retirees Limit on available funds means companies that apply early will receive p pp y y greatest benefit www.TheNationalCouncil.org 44
  • 45. Employers Are Eligible To Receive a Tax Subsidy for Providing Prescription Drug Coverage to Retirees > Under the retiree drug subsidy (RDS), the federal government subsidizes the provision of drug benefits by employers who offer coverage that meets a minimum standard. > RDS is a tax-free Medicare payment to employer-sponsored plans worth 28 percent of allowable drug costs between $310 and $6,300 . • A li t each covered retiree not enrolled in Part D i 2010 Applies to h d ti t ll d i P t in www.TheNationalCouncil.org Source: CMS cost threshold and cost limit announcement: http://rds.cms.hhs.gov/news/announcements/costthreshold11.htm 45
  • 46. Health Reform Could Reduce the Attractiveness of the RDS Several reform provisions could further reduce the attractiveness of the RDS » Coverage of drugs in the coverage gap • Makes PDP coverage more attractive » Elimination of the tax deduction for the RDS » Legislation does not enrich RDS payments to balance out these changes New environment could encourage some employers to drop retiree coverage and lead retirees to obtain coverage through a conventional Part D plan www.TheNationalCouncil.org 46
  • 47. Companies Claim RDS Changes Will Increase Costs A number of large employers have stated that the elimination of the tax deduction for the RDS will lead to reduced earnings > Although the RDS change does not take effect until 2013, accounting standards require that a deferred income tax asset be written down in the period legislation changing the tax law is enacted The American Benefits Council, the trade group that represents employer- sponsored health plans, is calling for Congress to “fix” this provision plans fix Sources: “Boeing will take $150M charge due to health reform” Business Insurance, March 31, 2010 accessed at : www.TheNationalCouncil.org http://www.businessinsurance.com/apps/pbcs.dll/article?AID=2010100339982 “American Benefits Council Vows To Fight For Repeal Of Part D Subsidy Provision In Reform Law” Inside Health Policy, March 29, 2010 accessed at: http://insidehealthpolicy.com/secure/health_docnum.asp?f=health_2001.ask&docnum=3292010_council&DOCID=3292010_council 47
  • 48. Implications www.TheNationalCouncil.org 48
  • 49. New Environment Could Lead Some Employers to Drop Retiree Coverage, Increasing Part D Enrollment > Under the retiree drug subsidy (RDS) the federal government subsidizes the provision (RDS), of drug benefits by employers who offer coverage that meets a minimum standard • Applies to each covered retiree not enrolled in Part D > Several reform provisions could further reduce the attractiveness of the RDS • Closing the Part D coverage gap • Elimination of the tax deduction for the RDS > These changes could encourage some employers to drop retiree coverage and require retirees to obtain coverage through a conventional Part D plan > A number of large employers have stated that the elimination of the tax deduction for the RDS will lead to reduced earnings Increased CMS scrutiny of plans and regulatory oversight may lead to additional market disruption. Specifically, the meaningful differences policy will require some sponsors to eliminate plans. www.TheNationalCouncil.org 49
  • 50. As Employers Grapple with Implementation, Industry Stakeholders Recognize the Need for Payment Reform Aetna CEO Ron Williams on payment reform: “To be certain, the system’s lack of focus on value is easy to see. Today’s health care payment structure rewards the volume, rather than the quality or efficacy, of services provided – a problem that results in pervasive overuse and misuse of health care resources….Aetna’s efforts to extract greater value for each health care dollar spent for our customers are instructive, and can help shape our discussion about controlling costs and improving access.” Former CEO Pacific Business Group on Health, Peter Lee, on payment reform: “Our health care system pays providers for the number of treatments and procedures they provide and pays more for using expensive technology or surgical interventions. It is neither designed to reward better quality, care coordination or gy g g q y, prevention nor to encourage patients to get the right care at the right time.” National Partnership for Women and Families President Debra Ness: “Delivery system reform is critical to getting us to where we want to go, which is creating a quality-based affordable health care system for everyone -- but we can't get there without transformational changes ” changes.” www.TheNationalCouncil.org 50
  • 51. ACA Attempts to Address Employers’ Concerns About Systemic Problems that Drive Cost Growth Care Delivery Transparency HIT vizes Supports System Incentiv Infrastructure Measurement Evidence (e.g. CER) Payment Methods HIT: Health Information Technology www.TheNationalCouncil.org CER: Comparative Effectiveness Research 51
  • 52. ACA E Experiments with C i t ith Care D li Delivery and Payment S t dP t System Models and Lays Groundwork for Future Exploration Demo / Pilots Requires Secretary to establish a Medicare Shared Saving (i e ACO) program (i.e., Grants funds to implement multidisciplinary “Health Teams” to support implementation of the PCMH model Directs Secretary to establish a pilot program for bundling payments for post- acute care and establishes a Medicaid bundled payment demonstration Establishes a series of chronic disease management programs New Entities / Creates new Center for Medicare and Medicaid Innovation (CMI) Structures Establishes an Independent Payment Advisory Board New Initiatives/ Requires the President to convene an Interagency Working Group on Health Authorities Directs the Secretary to award grants to entities that offer medication therapy management (MTM) services by licensed pharmacists Expansion of Increases MTM requirements for Medicare plans Existing Entities / Expands value-based purchasing program across multiple settings Authorities ACO: Accountable Care Organization www.TheNationalCouncil.org PCMH: Patient Centered Medical Home MTM: Medication Therapy Management 52
  • 53. Employer Plans Face Additional Pressures to Limit Premium Growth and Generosity of Coverage Plans will need to reduce premiums in 2018 to avoid the “Cadillac tax” Cadillac tax » ACA imposes a tax equal to 40% of the plan’s value that exceeds $10,200 for an individual and $27,000 for a couple Likely erosion of high-value high-premium plans due to the tax high value, high premium Sample Impact of Cadillac Tax on Premium Trend for High-Cost Plans 25,000 20,000 High-Value Plan Pre-Reform Premium 15,000 ($) High-Value 10,000 P Plan Post Post- Cadillac tax level is $10,200 for Reform 5,000 (grows at individuals in 2018 CPI+1%) 0 2010 2012 2014 2016 2018 2020 2022 2024 Sample premium trajectory based on a hypothetical plan with a $7,000 individual premium in 2010. Plan premium www.TheNationalCouncil.org inflated based on average medical inflation (CPI-M) for 2000-2009. Post-reform scenario shows plan with premium of $10,200 for an individual growing at inflation (CPI) plus 1%, based on average CPI for 2000 to 2009. 53
  • 54. Will Employers Drop Coverage? > Nearly 60% of Americans obtain coverage through an employer > Various incentives in legislation aim to prevent “crowd out” crowd out • Tax credits for small business • Penalties for large business > Some large companies have reported that the law will “adversely affect” their ability to provide employee health benefits due to increased costs > Expected trends from employer coverage: • Plus 6 - 7 million people due to individual mandate • Minus 8 - 9 million other people who would lose offer of ESI • Minus 1 - 2 million people who would get coverage through the exchanges The Massachusetts Experience: Despite concerns of “crowd out”, the state has not experienced a drop in employer coverage post-reform. Employer offer rates have increased since implementation. From 2007 to 2009, employer offer rates increased from 72 percent to 76 percent, while the national employer offer rate remained steady at 60 percent. www.TheNationalCouncil.org CBO March 20, 2010 Cost Estimate of the combined effect of H.R. 4872, the Reconciliation Act of 2010, and H.R. 3590, the Patient Protection and Affordable Care Act, as passed by the House March 21, 2010. 54
  • 55. Recent Study Suggests Employer Coverage Will Expand > Number of workers offered coverage will All Firms increase from 115 1 million to 128.7 115.1 128 7 million ( from 84.6% to 94.6% of US Workers Offered Coverage, after Reform 87.5 5.9 workers). Workers offered Coverage, before Reform 90.2 Total Workers 94.8 > The probability of being offered coverage increases proportionately Firm Size, ≤ 50 for workers at small firms > Of the 13.6 million workers newly Workers Offered Coverage, after Reform 10 25.4 offered coverage, only 3.2 million will Workers offered Coverage, before Reform 24.9 be employed by firms that would be Total Workers 41.2 subject to employer penalties Firm Size, > 50 > If large employers are allowed to participate in exchanges, both current Workers Offered Coverage, after Reform 97.5 31.2 and new insurance offerers will probably Workers offered Coverage, before Reform 115.1 do so Total Workers 136 0 20 40 60 80 100 120 140 160 Total Traditional Exchanges Millions of Workers 55 www.TheNationalCouncil.org Source: The New England Journal of Medicine, “The Effects of the Affordable Care Act on Workers'’ Health Insurance Coverage,” September 20, 2010. Spotlights data from RAND;s Comprehensive Assessment Reform Efforts (COMPARE) microsimulation model.
  • 56. Opportunities and Threats For Employers www.TheNationalCouncil.org 56
  • 57. Fully-Insured Employer Health Plans Opportunities Threats Paying the penalty may be more cost-effective Insurance market reforms and new taxes may than complying with mandate have downstream impact as health insurers may pass these costs on to employers in the Employees cannot be denied coverage in non- form of higher premiums employer health plans due to health status Cost of maintaining grandfathered status may Option to purchase healthcare coverage for be too high employees in Exchanges (for certain employers) l ) Employers f E l face penalties f not providing lti for t idi coverage Essential benefit requirements likely to enhance access for employees Larger employers must auto-enroll employees, potentially increasing operational burden Avoid MLR and other requirements by q y becoming self-insured www.TheNationalCouncil.org 57
  • 58. Self-Funded Employer Health Plans Opportunities Threats Accepting employer mandate penalty may be Like fully-insured employers, self-insured more cost-effective than complying with employers face penalties for not providing mandate g coverage MLR exemption and avoidance of insurance Self-insured plans must auto-enroll employees, industry fee provides financial advantage to potentially increasing operational burden self-funded plans Cadillac tax will place de facto limits on Self-funded Self funded plans also have greater autonomy coverage for generous self insured employer self-insured in designing benefits and implementing plans innovative payment and delivery reforms www.TheNationalCouncil.org 58
  • 59. Conclusion > It’s clear that there will be some new direct costs for employers due to health reform > There will also be new opportunities to help employers offer coverage and offset costs > However, much of the impact is unknown at this point • Definition of grandfathered plans is unclear • Impact of broader insurance reform and benefit design requirements on premiums and employer offerings • Will penalties be enough to prevent employers from dropping coverage? > Can payment and delivery reforms help employers and other private payers control underlying healthcare costs? www.TheNationalCouncil.org 59

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