February 2012 Newsletter

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February 2012 Newsletter

  1. 1. "Theres a way to do it better -- find it." ---Thomas EdisonI believe in todays world Mr. Edison would be applying those thoughts to Healthcare, our New Frontier.Recently, I was bestowed an honor to attend a National Accounts Healthcare Conference focused on finding abetter way. It was conducted by Blue Cross Consortium Plans titled: Transformations in the New Frontier. TheConsortium is a group of Blue Cross Associations across the country who make up their national accountsdistribution model. Collectively they insure over 100 million people, certainly carrying a strong influence on thefuture of healthcare.It was great to gain insight into what the market will be seeing in the next few years. If healthcare reform will becredited with one thing, it will be innovation. From new improved pay structures for primary care doctors toelectronic medical data sharing to new delivery systems like Accountable Care Organizations (ACO) or PatientCentered Medical Homes (PCMH) offering pay for performance bonuses for best outcomes. One hospital system(10 hospitals) in Illinois testing an ACO model for the past year had early results showing that test group alonelowered medical trend for the whole states book of business by 1%!Other innovations included technology for use in many facets of healthcare from showing transparency of providercost and quality ratings to apps for smartphones promoting games that engage wellness efforts faster than anycurrent efforts. Although change is difficult, many of these will have a fast adoption cycle as they mean so muchin cost savings and quality for everyone involved.In the upcoming Supreme Court hearings on whether PPACA is constitutional, lets hope no matter how ourJustices rule it will still encourage innovation and early adopters to help find a better way to mitigate our risinghealthcare costs and bring us to the New Frontier in Healthcare.Read about other innovative strategies in the Insurance Carrier and Provider Strategy section below.I hope you find this months newsletter timely and of interest.Warm Regards,Mike__________________________________________________________________________________________ ph: (708) 845-3126 • mike.wojcik@thehortongroup.com
  2. 2. Market Trends and StrategiesHealth Reform Law Gaining Wider Acceptance:Harris Interactive/HealthDay Poll"The public is still divided, mainly on partisan lines, as to whether to implement or repeal all, parts, or none of thehealth care reform bill, says Harris Poll Chairman Humphrey Taylor.The mid-January 2012 online poll found 36% of adults want the law repealed, 21% want it to remain as is andanother 25% would like to see only certain elements of the law modified.As the Patient Protection and Affordable care Act (PPACA) is engaged, support seems to be increasing slowlywith time. Another way of looking at it is as more people enjoy some of the early benefits, the law will becomedifficult to reverse.Some of the more note-worthy approval spikes versus a survey in November 2010 include:  71% support pre-existing condition coverage vs. 64%  57% like coverage for dependents up to age 26 vs. 55%  59% support insurance exchanges vs. 51%  70% like tax credits for small businesses vs. 60%  53% support employer mandate for groups over 50 vs. 48%  53% support measuring effectiveness of treatments vs. 44%  38% support an Independent Payment Advisory Board for Medicare spending vs. 32%  The least supported aspect of the law is the individual mandate that requires all adults to have health insurance or face a fine with only 19% of those polled supporting it.The poll also found that 55% believe health care reform should be addressed by each state separately, ratherthan at the federal level. For a copy of the Harris survey click here. For the HealthDay news article click hereLegislative Updates and ImpactsHave a Nagging Health Care Reform Question?For Help Navigating Through The Health Care Reform I recommend the following sites:Health Care Reform Latest News >>FAQs from The Council of Insurance Agents & Brokers >> ph: (708) 845-3126 • mike.wojcik@thehortongroup.com
  3. 3. This site offers easy to research answers to 287 high level Health Care Reform questions, all organized in 12categories. Content is provided by the Council of Insurance Agents and Brokers attorneys at Steptoe & Johnson,LLP., Washington, D.C. and updated weekly.PPACA 2012: Comparative Effectiveness Research (CER)Little heard of until now, is a provision of PPACA that will impact fully insured and self-funded plans with plan yeareffective dates of October 1, 2012 and is scheduled to cease in 2019. The Comparative Effectiveness Research(CER) provision will assess plans $1 per member (belly-button) covered under the plan and will increase to $2 in2014. For more details click here.CER fees will be used to help offset the cost of a newly created Patient-Centered Outcomes Research Institute(PCORI) to advance comparative effectiveness research and help patients, clinicians, purchasers and policy-makers make informed health decisions. It has a projected cost of $3 billion over the next 10 years.  Priorities for research will fall into five categories: o Research comparing options for prevention, diagnosis and treatment o Research on improving health care systems o Research on communication and dissemination o Research addressing disparities (race, gender, socio-economic status) o Research on how to accelerate patient-centered outcomes researchClick here for the PCORI website.Early Retiree Reinsurance Program UpdateThe Centers for Medicare & Medicaid Services (or CMS) announced on Friday (February 17, 2012) that the EarlyRetiree Reinsurance Program (or ERRP) had disbursed nearly $4.8 billion of the $5 billion the Affordable CareAct appropriated for the program. The remainder of the $5 billion is committed for reimbursements already inprogress and program administration costs.For more information on the update, please read the Feb. 17, 2012 announcment and review the Early RetireeProgram: Reimbursement Update February 17, 2012.Release of Essential Benefits Bulletin-The Rest of The StoryOn December 16, 2011 HHS released an informational bulletin outlining its proposed approach for definingEssential Health Benefits (beyond the original 10 categories originally listed). This bulletin gave states moreflexibility and freedom to implement the Affordable Care Act.For many years healthcare was looked at from a regional view. The Harris poll (above) even suggests stategovernance would be better received. With input from the American people, the Department of Labor, theInstitute of Medicine and research conducted by HHS, a new approach was developed. ph: (708) 845-3126 • mike.wojcik@thehortongroup.com
  4. 4. The original 10 Essential Benefits (categories) included: 1) Ambulatory patient service; 2) Emergency services; 3)Hospitalization; 4) Maternity and newborn care; 5) Mental Health and substance use disorder services, includingbehavioral health treatment; 6) Prescription drugs; 7) Rehabilitation and habilitative services and devices; 8)Laboratory services; 9) Preventive and wellness services and chronic disease management, and 10) Pediatricservices, including oral and vision care.  One of the three largest small group plans in the state by enrollment  One of the three largest state employee health plans by enrollment  One of the three largest federal employee health plan options by enrollment or  The largest HMO plan offered in the states commercial market by enrollmentThis approach is moving forward, but yet to be finalized by most states. The plan must include at a minimum, anequivalent to the original 10 coverage categories. In reality. most of the plan options offered include statemandated benefits which are over and above the original 10 categories. Remember the original view of the lawwas that if states offered mandated benefits that exceeded the 10 coverage categories, the state would beresponsible for funding subsidies on the Exchange that were impacted by the extra cost. Lucky coincidence--thismove now accommodates states that are heavy on state mandated benefits to buy some time as the federalgovernment will provide the subsidies through the transitional years of 2014 and 2015. HHS plans to re-evaluatethe states essential health benefit package in 2016 and may exclude some state benefit mandates at that time tocut back the cost. For more information on Essential Benefits, click here.Public Sector NewsHealth Benefits for Local Government - 2011 ICMA StudyThrough the collaborative efforts of the International City/County Management Association (ICMA) and Cigna, anationwide survey was conducted to better understand the challenges of providing comprehensive, cost-effectivehealth care benefit programs. Regardless of size or location, this was identified as a common problem.Some of the study findings:  The top three operating concerns included budgeting for the expense of employee and retiree benefits, unfunded mandates and their ability to effectively serve the needs of their constituents - given the intense pressures they face.  The majority (75%) of local governments share the premium cost of benefits with active employees. Nearly one-third pay the full premium costs.  A slight majority of the plans were fully insured however as populations exceeded 500,000 the majority were self-funded  The majority have or intend to increase the share of health costs paid by employees  Benefits included Medical, Pharmacy, Dental, Employee Assistance Plan (EAP) and Disability Insurance  Overall, about 26% of local governments currently offer account-based high - deductible health plans ph: (708) 845-3126 • mike.wojcik@thehortongroup.com
  5. 5.  Most (75%) continue to offer medical coverage for early retirees, but not pharmacy or dental, 60% provide coverage after age 65  Top Workforce Health Concerns included Obesity and Weight Control, Stress Management and Fitness.Cost saving strategies include:  Up to 89% have introduced health promotion programs  65% have taken on or are planning significant increases to co-pays, deductibles, or coinsurance  61% are ramping up communication and education and promoting living healthier lifestyles.  60% audit eligibility  48% create incentives to encourage employees to use high quality/low cost hospitals and physicians  41% have reduced plan options  35% reward / penalize employees based on their tobacco-use status  34% have taken action to introduce programs to help employees maintain their body mass index (BMI) with target levelsTop Purchasing Considerations: (regardless of size and location)  Price / copays and other charges  Network access and discounts  Ability to improve employee health through wellness programsLocal government concerns of controlling healthcare costs are of great importance in todays economy. Theytend to be even more challenged due to industry characteristics such as collective bargaining, a very loyal andlong term work force and as a result an aging population and a large dependent participation pool. TheICMA/CIGNA study gives a very good overview of not only the challenges but the solutions to mitigate risinghealthcare costs. For a copy of the full study, click here.Insurance Carriers and Healthcare Providers In The NewsWellPoint to Invest $1 Billion to Boost Doctors Fees By 10%Starting this summer, WellPoint Inc, will increase primary care doctor fees by 10% and include additionalpayments to treat patients it covers, which may increase their overall fees by as much as 50%. It is projected thenew approach will infuse an additional $1 billion into primary care. The offset can be fewer emergency-roomvisits and hospital stays.Without change, the Primary Care segment of healthcare is projected to face great shortages over the nextdecade. To read more click here. ph: (708) 845-3126 • mike.wojcik@thehortongroup.com
  6. 6. United Health Will Tie Doctors Payments to Quality of Care in U.S. ShiftUnited Health Group, Inc., the largest U.S. health insurer by sales, will pay doctors based on quality of their carein a cost -cutting effort that also benefits the companys consulting business. United expects to save twice asmuch as it would spend on incentive payments for doctors because patients will be healthier. The program isexpected to extend to 70% of Uniteds commercial business by 2015, up from less than 2% now. For more onthis story click here.Insurer Aetna Plans to Beef Up Primary Care PayHealth Insurer, Aetna, intends to pay doctors in practices that qualify as patient-centered medical homes an extra$2 to $3 per member per month. The practice must be recognized as a (medical home) by the NationalCommittee for Quality Assurance.Patient Centered Medical Homes try to care more for all of a patients health needs instead of just treating thesymptom a patient came in for. Early reports show considerable savings from PCMH models. For more on thisstory click here.Human Resource CenterHow to Handle Medical Loss Ratio RefundsIn late 2011, the Department of Health and Human Services released both a final and interim final rule regardingMedical Loss Ratios (MLR). The Department of Labor also issued a technical release giving direction toemployer--sponsored health plans governed by ERISA as to how to handle rebates. The final rule was publishedin the Federal Register on December 7, 2011, 76Fed Reg 76574The advisory discusses the obligation of plan sponsors receiving rebates. The requirements differ based on plantype. The advisory separately addresses rules for plans subject to ERISA, state and local governmental plans,and church plans. Special rules for terminated plans are also discussed.Insurance companies must report their MLR data to HHS on an annual basis so that residents of every state willhave information on the value of health plans offered by different insurance companies in their state. Insurers willmake the first round of rebates to consumer in 2012. They must be paid by August 1st each year. The MLR ruledoes not apply to self-funded plans. Under the MLR, health insurers must spend a minimum percentage (80% forindividual and small group market accounts and 85% for large group accounts) of the dollars they collect throughpremiums on actual medical services, and must limit the amount they spend on administrative costs, includingsalaries, profits and commissions.In the event the insurer fails to meet the ratios, it must issue rebates directly to the plan sponsor who in turn mustdivide and use the portion of the rebate attributable to the employees premium co-share--"for the benefit of thesubscribers". ph: (708) 845-3126 • mike.wojcik@thehortongroup.com
  7. 7. The rule states this can be done in one of three ways: 1) reduce employees co-share for the next policy year forall subscribers covered under any group health policy offered by the plan; 2) reduce employee co-share of thenext policy year for only those subscribers covered by the group health policy on which the rebate was based; 3)provide a cash refund only to subscribers who were covered by the group health policy on which the rebate isbased. The rule states employers can use whichever method is easiest.It is anyones guess yet as to whether groups will see a rebate this year. According to the U.S. GovernmentAccountability Office, of data they studied in 2010 at the request of Congress, most insurers would have met orexceeded the 2011 PPACA MLR standards.Click link to an HHS fact sheet on the final and interim-final rulesHorton Webinars & SeminarsTrain the TrainerHorton workshops are designed to keep busy professionals current on a range of insurance related topics. TheHorton Group engages some of the brightest minds in the country to help you fine-tune your professional skillsand assist in achieving your organizational goals. Our workshops are offered at several convenient locationsthroughout the year. In addition, we can present these workshops at your company location or for yourassociation or trade group.As always - if you would like to register for a webinar or workshop, please do so via the following link:http://www.thehortongroup.com/Insurance_Workshops/ ph: (708) 845-3126 • mike.wojcik@thehortongroup.com

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