CNBC recently featured a story about Walmart and their history of not only suggesting that employees visit Centers of Excellence for surgeries and second opinions but flying them all expenses paid. The case study revealed that between 2015 and 2018, more than half of their employees suffering from spine pain were able to avoid surgery by seeking treatment at Mayo Clinic.
Shorter hospital stays, lower readmission rates, fewer episodes of postsurgical care and a faster return to work were other benefits gained when results were compared to patients who chose other hospitals for treatment. Walmart reported that even though they spent more per surgery at Mayo Clinic than what other hospitals were charging, they saved money because of better outcomes and surgeries that were avoided.
While many employers use health screenings and health risk assessments to detect medical conditions early on, some have a difficult time determining the value of these wellness-related measures. Some compare the costs of testing to an estimated cost of medical claims, but in an effort to determine a more accurate return on investment, others are taking factors such as reduced absenteeism and increased overall productivity into consideration. It makes sense since improving overall health and productivity really is the objective of wellness programs.
As reported by The Phia Group on March 29, 2019, a federal judge in Washington, D.C. ruled that the new Department of Labor rules expanding the marketing of Association Health Plans (AHPs) violate existing law. TPAs, brokers and employers see this as a significant blow to AHPs, especially new self-funded AHPs that have been preparing to launch on April 1, 2019.
Federal Judge John Bates sided with several states that took issue with the DOL’s final rules several months ago, arguing that a broad availability of AHPs is not within the scope of ERISA, which defines an employer as having at least two or more employees. The final rules were going to allow small employers, including working business owners (employers of one), to join with others based on either common geography or industry affiliation to form an AHP. It appears that the Judge’s ruling means that both criteria, geography and industry affiliation, must be met and that qualifying employers must have a minimum of two employees.
Thus far, we are not aware of any response filed by the DOL. We will continue to monitor reactions to the ruling and other developments regarding Association Health Plans.
The rule requiring hospitals to post their prices online, which became effective on January 1, 2019, really hasn’t done much to promote cost transparency. The problem is that the price lists, which payers refer to as chargemasters, break common procedures into complex, coded retail-priced components that mean little to the average consumer.
As an example, determining the cost of an ER visit would require knowing the codes and locating costs for all parts involved in the visit. Few people, if any, are familiar with these complex details. While giving consumers price information in an easy-to-understand format would be a big help, it appears that CMS Administrator Seema Verma was accurate when she described this as little more than a “critical first step”.
According to a public-private partnership launched by HHS, the percentage of U.S. healthcare payments tied to value-based care rose to 34% in 2017, a 23% increase since 2015. Fee-for-service Medicare data and data from 61 health plans and 3 fee-for-service Medicaid states with spending tied to shared savings, shared risk, population-based payments and bundled payments were examined in the analysis.
Another recent proposal of the Trump Administration would allow employers to fund tax-exempted Health Reimbursement Arrangements to help pay for an employee’s individual health insurance premiums. In addition, the proposal would also allow employers that offer group health coverage to fund an HRA of up to $1,800 to reimburse employees for “qualified” medical expenses. Easing restrictions in this manner is seen by many as a big boost for small businesses that are unable to provide employer-sponsored healthcare. Comments are being accepted through December 28, 2018 and if approved, the new rules would apply for plan years beginning on or after January 1, 2020.
While the Department of Health and Human Services has asked drug manufacturers to disclose list prices for most drugs they feature in television commercials, the industry’s largest trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), has countered with an offer to include content directing consumers to a new website where pricing information could be found.
The Administration’s request requires that list prices be featured in text on the screen in television ads for drugs covered by Medicare and Medicaid costing more than $35 per month. A great deal of debate has developed, with PhRMA arguing that featuring list prices would confuse consumers by making them think they have to pay more than they actually would. HHS is still accepting comments on the proposal.
Each year, the IRS announces inflation-adjusted limits for HSA and FSA contributions as well as minimum deductibles and out-of-pocket levels for High Deductible Health Plans (HDHP). Based on their recent announcement, maximum contribution levels going into effect on January 1, 2019 are as follows:
In late Fall, the President signed two bills that should make it easier for pharmacists to help customers find the lowest cost, appropriate medications. The “Know the Lowest Price Act of 2018” and “Patient Right to Know Drug Prices Act” bills are designed to crack down on “gag clauses” that prevent pharmacists from telling patients about more affordable options for prescription drugs. Having developed a “drug pricing blueprint” to promote greater price transparency, the President praised these bills as representing significant steps in that direction.
You might be surprised to hear that millennials represent one third of the American workforce, but Pew Research Center confirms it. If your health benefit plan hasn’t adapted to the needs and lifestyles of these young people, you’re missing an opportunity to boost retention, build loyalty and enhance wellness.
For starters, it’s important to realize that 45% of young adults age 18 to 29 do not have a primary care doctor. They do, however, have a smartphone and you can bet they use it to access the internet constantly. With online sources like WebMD offering so much healthcare information, it’s no wonder that millennials are likely to self-diagnose and even treat one another at home before seeing a doctor. If young people can find much of the healthcare information they need in the palm of their hand, you can bet they expect to find benefits and enrollment information easily accessible as well.
They Want Information Now
Just like so many of us who have come to expect an immediate response to everything, millennials who do need a doctor expect the visit to happen quickly and easily. According to PNC Healthcare, this explains why 34% of millennials prefer to use a retail clinic rather than waiting several days to see a primary care physician in their office – a rate twice as high as baby boomers. It would also seem to point to an increased use of telemedicine.
Cost Matters to Millennials
Millennials face more than their fair share of financial pressures and take their finances seriously. Surveys show they are more willing to request a cost estimate prior to choosing a treatment option than baby boomers or seniors ever were. This not only makes cost transparency tools important, but it’s a very positive trend that should contribute to lower claim costs going forward.
Whether it be treatment options, provider access or cost of care, the demand for health and benefit plan information will only increase as more and more millennials enter the workforce. In order to respond to change, self-funded employer groups will need the resources of an independent TPA that can combine the right plan design with more personalized, interactive communications and more innovative ways for younger employees to access the more personalized care they will need going forward.