Health Care Updates 8/2

Health Care Reform

A recent study increased employer cost due to the passage of health care reform legislation based on the experience of Massachusetts state health care reform. The study's authors predict an increase of at least 2.2% over medical trend and site employer increases of 21.7% over the two years after reform was enacted.

Despite the cost projections, a recent survey by the International Foundation of Employee Benefit Plans(IFEBP) found that (87%) employers remain confident that they will continue to offer health care benefits to their active employees because they are critical to employee recruitment, retention and remaining competitive.

The CLASS Act (Long-Term Care)

The Community Living Assistance Services and Supports (CLASS) Act, part of health care reform, establishes a federal insurance program to provide benefits to workers who become disabled and retirees. The CLASS program will pay some nonmedical expenses of long-term care, such as an aide to bathe them or prepare meals at home, or to defray some of the costs of nursing home care.

The program is voluntary, and will be funded by premiums paid by workers.

Employers who choose to participate have the option to automatically enroll their employees and to deduct the premiums from their paychecks. Individual employees will be allowed to opt out, and those who work for nonparticipating employers will have the option to enroll individually.

Average monthly premiums will start at $123 in 2011. After five years of premium payments, participants will be eligible for a projected benefit of about $75 per day ($27,375 annually). They can receive the inflation-adjusted benefit for the rest of their lives, as long as the limitations remain. Full guidance on the program is still forthcoming.

State Benefits Topics

San Francisco Health Care Ordinance

The Supreme Court let the San Francisco Health Care Ordinance stand by declining to listen to arguments that the law was pre-empting ERISA. That officially ends the legal challenge on the law and paves the way for other local entities to enact their own taxation on health care.

Massachusetts and Defense of Marriage Act

In two cases challenging the federal Defense of Marriage Act (DOMA), a federal judge ruled that it is unconstitutional for DOMA to limit federal recognition of marriage to opposite-sex spouses. In once case, same-sex couples sued to challenge DOMA on the grounds that it deprived them of various benefits available to opposite-sex spouses (including the federal employees’ health plan and Social Security benefits). In the other case, the state of Massachusetts sued to challenge DOMA because it deprived same-sex spouses married under Massachusetts law from enjoying many federal benefits (including the right to be buried next to a deceased spouse in any military cemetery funded by the Veterans Administration) and imposed burdens on the state (including the need to impute income when providing health coverage to the same-sex spouses of state employees).

Industry Trends

· Aon Corporation and Hewitt Associates, Inc. announced that the boards of directors of both companies have approved a definitive agreement under which Hewitt will merge with a subsidiary of Aon.

· In its 2010 U.S. Employer Health Insurance Plan Study, J.D. Power, found that employers place more emphasis on plan-service experience, account servicing, product offering/product design and problem resolution than on cost/cost management. http://www.jdpower.com/Healthcare/ratings/member-health-plan-ratings

· Health Net is required to pay $250,000 to settle the first ever state HIPAA privacy suit. The Connecticut lawsuit stemmed from a May 14, 2009, theft of a portable computer disk drive from Health Net's Shelton, Conn., office. The disk contained PHI, Social Security numbers and bank account numbers on about 446,000 past and present enrollees, and Health Net first posted a notice on its Web site and started notifying affected individuals on Nov. 30, 2009, the state alleged.

Wellness Research

· Engaging Employees on Wellness

· Employer Wellness Initiatives Grow, but Effectiveness Varies Widely

Health Applications (for Android)

· Hands Only CPR (American Heart Association): Search for "Hands-Only CPR" in the Market. (Free)

· Medic ID: Stores emergency medic alert information (including medical history, insurance info and emergency contacts), allowing medical personnel to retrieve important information in an emergency. ($1.50)

· Absolute Fitness: Log exercise, weight and diet goals. Export data to multiple formats and online backup of data. ($4.99)

· Sleep logger: Tracks sleep time. (Free)

· TouchBreath: Relaxation exercises to improve breathing and lung function. ($4.95)

· ICE: In case of emergency information for first responders and hospital staff. ($2.99)

Benefit News - Week of 7/5/2010

Health Care Reform

• The Congressional Budget Office recently revised their projections concerning the cost of the health care reform legislation. Their revised numbers reflect that it will cost $115 billion more than initially predicted.

• The National Federation of Independent Business (NFIB) has joined several states in a case challenging the US health care reform law. The lawsuit challenges Congress’ constitutional authority to impose an individual mandate and claims the law infringes on states' rights. http://us.select.mercer.com/blurb/179240/

• Mercer's analysis of the health care reform legislation projects that in the near term, employers will absorb an additional 4-6% increase above current health care cost trends. Furthermore, their analysis estimates that it is highly likely that the cost trend may increase at a higher rate than expected over the next 10 years. http://us.select.mercer.com/blurb/179623/article/20106649/

• Governmental guidance defining a "grandfathered plan" was released. If plans make changes, like significantly decreasing the benefits covered, materially increasing cost sharing to discourage covered individuals from seeking needed treatment, or substantially increasing the cost of coverage borne by participants, the plan will lose its grandfather status. The government estimates that between 39 percent and 66 percent of employer plans will probably lose their grandfathered status by 2013.
• Any health plan seeking to maintain grandfather status must include a statement, in any plan materials provided to participants describing the benefits provided under the plan, that the plan believes it is a grandfathered plan within the meaning of PPACA.
• If an employer offering a fully insured plan changes insurers, the affected benefit package loses grandfathered plan status.
• For fixed-amount copayments, a plan will lose its grandfathered plan status if there is an increase since March 23, 2010, in the copayment that exceeds the greater of (A) the maximum percentage increase or (B) five dollars increased by medical inflation.
• A plan loses its grandfather status if the employer or employee organization decreases its contribution rate to any tier of coverage for a class of similarly situated individuals by more than five percent below the contribution rate on March 23, 2010.
• A plan that loses its grandfathered status becomes subject to a number of additional requirements including:
• Non-discrimination requirements applicable to fully-insured plans,
• Required coverage of preventive care and immunizations without cost sharing,
• Required coverage of some expenses incurred in clinical trials in some circumstances,
• A revamped appeals process, including external review,
• Prohibition on requiring prior authorization or increased cost sharing for certain emergency services performed in connection with a legitimate emergency,
• Prohibition on requiring authorization or referral for OB-GYN services, and
• Requirement that enrollees be able to select a primary care provider, including in the case of children, a pediatrician, from any available primary care provider that is accepting new patients.
• Annual out-of pocket maximums may not exceed the level established for Health Savings Accounts in connection with qualified high deductible health plans, and
• Deductibles may not exceed $2,000 for individual coverage and $4,000 for family coverage.

FMLA

The U.S. Department of Labor clarified the definition of "son and daughter" under the Family and Medical Leave Act to ensure that an employee who assumes the role of caring for a child receives parental rights to family leave regardless of the legal or biological relationship. An employee who intends to share in the parenting of a child with his or her same sex partner will be able to exercise the right to FMLA leave to bond with that child. http://www.dol.gov/opa/media/press/WHD/WHD20100877.htm

COBRA Subsidy

Under an amendment proposed last week to tax extension legislation, employees laid off from June 1 through Nov. 30, would be eligible for the 65% federal premium subsidy but for six months instead of the prior 15 months.

San Francisco Health Care Ordinance

The Obama administration took a public stance in favor of San Francisco's side in the legal dispute over the city's health coverage law. The government urged the Supreme Court to reject an appeal by restaurant owners who objected to paying part of the cost.

HSA & High Deductible Plan Limits

The limits for HSA will remain capped at $3,050 for individuals and $6,150 for families (with a $1,000 catch-up contribution) and HDHPs will continue to have a minimum deductible of $1,200 for individuals and $2,400 for families with a maximum out of pocket limit of $5,950 for individuals and $11,900 for families.

Trends/Surveys

• The 2010 version of the annual Commonwealth Fund comparison of the U.S. health system with those in other industrialized nations found the US the lowest in the rankings. The criteria comprised quality, access, efficiency, equity, whether people in each country lived long and productive lives, and how much each country spent per person on care.
  

Benefits News - Week of June 1st

My apologies - I haven't posted in awhile and there's been quite a bit of news.

Health Care Reform

Legal Challenges: Two constitutional challenges have been levied against the new health care reform law - one by the state of Virginia and another 13 other states. However, a recent court case about indicates that the Supreme Court is likely to hold up the law. (U.S. vs. Comstock)

Excise Tax: A recent Towers Watson study estimates that in 2010 the average cost for single coverage will be $5,184 and family coverage will cost $14,988. If costs increase 8% annually, more than 60% of the employer plans Towers Watson analyzed would be hit by the tax in 2018.

Disclosure Requirements: By February 2011, HHS must develop new standards regarding health plan summaries. The law requires that these summaries be provided to all new hires and annually at open enrollment starting March 23, 2012. The summary must not exceed a 4-page length limit, but must include: definitions of standard insurance and medical terms, coverage description, including cost sharing for each of the categories of essential health benefits; coverage exceptions, reductions, and limitations; cost-sharing provisions such as deductibles, coinsurance, and co-pays; coverage continuation provisions, a “coverage facts label” that includes examples illustrating common benefit scenarios, such as pregnancy or chronic medical conditions, as well as any related cost-sharing; a statement as to whether the plan provides minimum essential coverage and ensures that its share of the total allowed benefit cost under the plan is no less than 60% of those costs; a statement that the outline is a policy summary and that consumers should consult the plan’s coverage document to determine the plan’s governing contractual provisions; and a contact number for additional questions and an Internet website where actual plan policies and certificates can be reviewed and obtained. No one is quite sure how all this information will fit within a 4-page limit.

Coverage for dependents up to age 26: Three-fourths of employers say they will wait until the effective date to comply with a provision requiring them to extend coverage to adult children up to age 26 according to a study by Towers Watson while 16% said that they would extend coverage early

Automatic enrollment: Employers will be required to notify employees of the plan’s auto-enroll provisions and their right to opt out of coverage.

Additional Fees: Effective Jan 1, 2013, a $2 per participant fee will be assessed against insured and self-insured plans.

Future Guidance: There will also be a large volume of guidance flowing from numerous agencies over the coming years as the government begins to implement this complex law.

HIPAA

Full enforcement of some recent HITECH Act changes to the HIPAA privacy and security laws is being delayed until the US Department of Health and Human Services (HHS) provides more guidance. The agency expects to soon issue rules on business associates’ liability, restrictions on selling protected health information (PHI) and using PHI for marketing, and strengthened individual rights to access electronic records and restrict PHI disclosure.

Flexible Spending Accounts

The IRS confirmed that expenses relating to banking cord blood are not considered "medical care expenses" and are therefore not eligible for tax favored status under a pre-tax health plan or flexible spending plan. http://www.irs.gov/pub/irs-wd/10-0017.pdf

Mental Health Parity

A coalition of managed behavioral healthcare organizations have filed a lawsuit against the DOL, HHS, and Treasury to block implementation of regulations issued to enforce provisions of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)

Interesting Healthcare Related Articles:

Direct Contracting With Providers May Help Cut Costs

Consumers and Health Information Technology: A National Survey

Health Care Reform Passes (and other updates)

Health Care Reform

The House of Representatives voted on Sunday to accept the Senate version of the health care reform bill and changes to the Senate bill as a separate budget reconciliation bill.

The next step is for the reconciliation bill to be considered by the Senate starting on Tuesday. For the reconciliation bill to pass the Senate, it would require a simple majority vote (51 votes), with Vice President Biden available to break a tie.

Total cost of health care reform: $940 billion over 10 years, according to the Congressional Budget Office.

Implementation timeline of key employer activities:

Within 6 months after enactment

• Adult dependents up to age 26, if they are not eligible for other employer coverage, must be covered;
• Prohibits lifetime limits and restrictive annual limits (as determined by the Health and Human Services Secretary).
• Requires qualified health plans to provide at a minimum coverage without cost-sharing for preventive services rated A or B by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children, and adolescents, and additional preventive care and screenings for women.

In 2011:

• Over the counter drugs no longer eligible for reimbursement under flexible spending plans
• Increase the tax on distributions from a health savings account that are not used for qualified medical expenses to 20% (used to be 10%)

In 2013:

• Medical flexible spending plans are limited to $2,500/year
• Increase the Medicare tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly
• Eliminate the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments
• Impose an excise tax of 2.9% on the sale of any taxable medical device.
• Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income for regular tax purposes

In 2014

• No annual limits
• No preexisting condition exclusions
• No waiting periods of longer than 90 days
• Adult dependents up to age 26 eligible for employer coverage regardless of whether the adult dependent has access to other employer coverage.
• Companies not offering coverage must pay $2,000 for all full-time employees
• Employers offering unaffordable coverage would be assessed $3,000 per full-time employee who enrolls in the exchange and receives a subsidy.
• Imposes an individual tax on those without qualifying coverage of the greater of $695 per year up to a maximum of three times that amount or 2.5% of household income
• Imposes an annual fee on the health insurance sector starting with $8 billion in 2014
• Creates American Health Benefit Exchanges
• Permits employers to offer employees rewards of up to 30% of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard.

In 2017:

• States to allow businesses with more than 100 employees to purchase coverage in the state exchanges (referred to as SHOP Exchange)

In 2018:

• Excise tax begins and to medical plans in excess of $10,200 for an individual or $27,500 for a family. Stand-alone dental and vision benefits are excluded from the excise tax calculation.

In 2020:

• Excise tax thresholds will begin to be indexed to general inflation
• Phases out the Medicare Part D coverage gap (aka "donut hole") completely by 2020.

COBRA Subsidy Extension - Third time's the charm

On March 10, 2010, the Senate passed the American Worker, State, and Business Relief Act of 2010. Among the provisions was an extension of the COBRA subsidy through December 31, 2010. The bill now moves to the House for approval.

HIPAA

HHS has begun posting the list of employers with breaches impacting over 500 individuals: http://www.hhs.gov/ocr/privacy/hipaa/administrative/breachnotificationrule/postedbreaches.html

Of particular note: Lucille Packard Children's Hospital, Kaiser, UCSF

Dental Insurance

Some dental plans are trying to more closely align coverage not only with the individual’s cavity and gum history but even with other non-dental conditions, such as diabetes or heart disease. By providing broader coverage upfront, the goal is to forestall or prevent more costly dental work later. Employees with a cavity track record, for example, might get more than two covered cleanings annually. Other plans might pay for deep cleanings of diseased gums (also known as scaling and root planing), rather than asking the employee to pick up part of the tab. Depending on the employee’s risk, other products might be offered, including fluoride varnish or a special prescription mouth rinse.

Other items of note:

• National Employee Benefits Day - April 6, 2010
• Culturally Competent Health Care - a white paper written by Aon about limiting disparities in health care delivery and treatment

Health Care Updates March 2010

Healthcare Reform

The White House is expected to announce mid-week the president's preferred path forward for getting health care legislation passed. The widespread assumption on Capitol Hill is that Obama will address the specific changes that he wants made to the Senate's version of the legislation beyond the proposals he already outlined and that he will encourage Congress to pass those changes using reconciliation

The updates to the Senate bill based on the President's plan:

• The “Cadillac plan” excise tax delayed until 2018 and the dollar limits increased to $10,200 per individual and $27,500 for families. It excludes stand-alone dental and vision plans from the tax. The tax also would be adjusted for employers with higher health costs due to employees’ age or gender.
• Increases the employer penalty for not providing coverage from $750 to $2,000 per employee in 2014.
• Requires all plans to cover dependents up to age 26 immediately.
• Starting in 2014, health plans could not impose annual and lifetime maximums, exclude pre-existing conditions, or discriminate in favor of highly compensated individuals.
• First-dollar coverage of preventive services would be required starting in 2018.

COBRA Subsidy

A new bill is being put together by Senate Majority Leader Harry Reid to extend the COBRA premium subsidy for laid-off workers. The draft bill would extend the COBRA premium subsidy for another 10 months, so employees laid off through year-end would be eligible for the 65% subsidy for up to 15 months. The bill is expected to pass sometime in March or April which will require employers to retroactively send out COBRA subsidy notifications.

IRS Fringe Benefit Audits: National Research Program (NRP)

The IRS has advised that they will be aggressively auditing fringe benefits to determine compliance and noncompliance characteristics in several core areas traditionally associated with employment taxes. They will be looking at: employer provided automobiles, gift cards and other de minimis fringe awards, discounted services, education assistance, meal reimbursements, dependent care assistance programs, adoption assistance, leave banks, moving expenses, fitness memberships, group term life, transit benefits, retirement planning, severance, and vacation awards.

IRS 401(k) Audits

In March, a random sample of 401(k) plan sponsors will receive IRS questionnaires from the Employee Plans Compliance Unit (EPCU) to better understand compliance behaviors and determine if employers are correcting errors and using IRS-developed compliance tools. The responses could lead to follow up questions with an EPCU agent, but the IRS has not said whether it could also trigger an audit.

http://www.irs.gov/pub/irs-tege/win10.pdf

Health Insurance News

Congressional Summons

Five health insurers posted a combined profit of $12.2 billion last year. These insurers are being invited to testify in front of Congress regarding their business models. Wellpoint recently testified after passing a 39% rate increase to members.

California Investigation

The California Attorney has an ongoing investigation into possibly illegal practices by some California health insurers and has subpoenaed financial records and other documents from California's seven largest health insurance companies. Records from Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare were subpoenaed. The subpoenas cover pay-for-service health plans, which are health plans that reimburse doctors and hospitals for services performed instead of a health maintenance organization (HMO) approach. The investigation was prompted by reports that California's five largest health insurance providers were denying insurance claims at rates of up to 39.6 percent.

Current CA Claims denials rates are:

• PacifiCare -- 41.17%
• Cigna – 35.43 percent
• HealthNet – 25.82 percent
• Kaiser Permanente – 26.96 percent
• Anthem Blue Cross – 24.5 percent
• Blue Shield – 22 percent
• Aetna -- 6.4 percent

CIGNA

CIGNA is expanding their onsite capabilities through the acquisition of Kronos Optimal Health Company, a Phoenix-based health and wellness company that specializes in lifestyle management programs, face-to-face coaching, biometric screenings and health education programs. Additionally, continuing with changes to their management team, CIGNA appointed Alan Muney, M.D., MHA, as senior VP of the company's total health and network teams.

Blue Shield of California

The CTO Forum announced that Blue Shield of California's senior vice president and chief information officer, Elinor MacKinnon, has been appointed to its CIO Council Advisory Board. The CIO Council brings together IT executives from to foster discussion and collaboration regarding the advancement of technology and innovation within organizations.

Technology

Five of New Jersey’s insurers are participating in a pilot program to allow doctors and hospitals to use a single Web portal to check patients’ medical coverage and claims, in an effort to reduce administrative costs. The pilot program allows office staff to quickly determine eligibility and benefit information, such as the amount of copays and differences in coverage for in-network or out-of-network treatment. It also provides for online submission of health care claims and gives physicians access to current information on the status of claims.

California Legislation

A recent court ruling in California (McCarther v. Pacific Telesis Group), ruled that Kin Care does not apply to paid sick leave policies that are based on uncapped sickness absence programs. In these cases, there was found to be no Kin Care obligations.

Studies/Trends

• Patients of color are less likely than whites to be treated by experienced surgeons or to receive care in high-volume hospitals, according to a new study. (http://latimesblogs.latimes.com/booster_shots/2010/02/blacks-whites-hispanics-asians-surgery-hospital-quality.html)
• Workers With Depression, Although Treated, Have More Disability Absences: Study (Assessing the Relationship Between Compliance With Antidepressant Therapy and Employer Costs Among Employees in the United States)
• Employers report that lack of employee engagement is the biggest obstacle to changing health behaviors. Still, they are trying new ways to encourage employees to become healthier and buy health care services more efficiently. (Purchasing Value in Health Care, Towers Watson Report, 2010)
• If focusing wellness programs on weight loss there may not be value. All the evidence on physical activity illustrates that people gain benefits from physical activity regardless of whether they lose weight in the long term. The vast majority of cases, of course, don't lose weight in the long term, but they still get the benefits of improved physical activity. The weight loss goal is completely unnecessary. (Paul Campos, a professor of law at the University of Colorado, and the author of The Obesity Myth: Why America's Obsessions with Weight is Hazardous to Your Health)