While plenty of folks talk about reference based pricing as though it’s a fad that has come and gone, we’re finding more interest from employers all the time. This may be because many like to brand it as another form of disruption, but regardless of how you brand it, reference based pricing is becoming a more important part of our value proposition all the time. It’s becoming more widespread because it enables a self-funded plan to limit costs to an extent that few other measures, if any, can match. This is primarily because by negotiating in advance with hospitals to accept a schedule of fixed payments for certain healthcare services, carrier-sponsored provider networks can be bypassed.
The fact is that while reference based pricing may be considered disruptive by many hospitals, it works. It is a transparent approach that can save a lot of money for self-funded health plans and their members. And finding ways to help self-funded employer plans provide high quality, high value healthcare to their members is our most important job.
In October, a bipartisan group of senators introduced a bill that would ease the ACA reporting mandates for employer-sponsored health plans. The bill would roll back the reporting requirements of Section 6056 and replace them with a voluntary reporting system. The bill would also allow payers to transmit employee notices electronically rather than having to send paper statements by mail.
While self-funded health plans must now comply with Sections 6055 and 6056, it is not yet clear how the bill would affect Section 6055 requirements. Senators Rob Portman of Ohio and Mark Warner of Virginia, sponsors of the bill, say their proposal would give the government a more effective way of applying premium tax credits to consumers who purchase insurance through an Exchange, something the administration has been trying to accomplish.
We often hear of professional athletes succeeding under pressure by staying “in the moment” and remaining focused on the things that are within their control. This challenge can be applied to the uncomfortable position all of us find ourselves in today – somewhere between complying with existing laws and anticipating the unknowns coming from Washington.
While the IRS has relaxed enforcement of the individual mandate and acknowledged problems in the ACA reporting system, it has confirmed that an applicable large employer is still subject to an employer shared responsibility payment if it fails to offer coverage to 95% of its full-time employees. We continue to help large employers offer minimum essential coverage to avoid penalties, when appropriate, and track offers of coverage to comply with reporting requirements on IRS forms 1094 and 1095.
Other matters remain up in the air as well, including the so-called Cadillac tax on high-cost health plans and any changes in maximum contributions that may be made to HSAs, which would require legislative action. While any significant ACA repeal, replace or repair efforts appear to be overshadowed by the Administration’s interest in tax reform, we continue to monitor developments in healthcare reform and keep our clients and partners informed. It’s our way of doing what we can and remaining “in the moment.”
The State of Benefits report from BenefitFocus shows that workers under the age of 26 are investing 20% more of their salary in HSAs than other generations. This is certainly due to the fact that nearly half have elected to enroll in high deductible health plans in 2017. While PPO plans remain very popular, especially among older adults, employee contributions to HSAs and FSAs are rising. A growing interest in savings among young people is another factor contributing to the increased popularity of HSAs.
Press Release from Education and the Workforce Committee Chairwomen Virginia Foxx on April 5, 2017.
The House today passed the Self-Insurance Protection Act (H.R. 1304), legislation that would protect access to affordable health care options for workers and families. Introduced by Rep. Phil Roe (R-TN), the legislation would reaffirm long-standing policies to ensure workers can continue to receive flexible, affordable health care coverage through self-insured plans. The bill passed by a bipartisan vote of 400 to 16.
“By protecting access to self-insurance, we can help ensure employers have the tools they need to control health care costs for working families,” Rep. Roe said. “Millions of Americans rely on flexible self-insured plans and the benefits they provide. Federal bureaucrats should never have the opportunity to limit or threaten this popular health care option. This legislation prevents bureaucratic overreach and represents an important step toward promoting choice in health care.”
“This legislation provides certainty for working families who depend on self-insured health care plans,” Chairwoman Virginia Foxx (R-NC) said. “Workers and employers are already facing limited choices in health care, and the least we can do is preserve the choices they still have. I want to thank Representative Roe for championing this commonsense bill. While there’s more we can and should do to ensure access to high-quality, affordable health care coverage, this bill is a positive step for workers and their families.”
BACKGROUND: To ensure workers and employers continue to have access to affordable, flexible health plans through self-insurance, Rep. Phil Roe (R-TN) introduced the Self-Insurance Protection Act (H.R. 1304). The legislation would amend the Employee Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code to clarify that federal regulators cannot redefine stop-loss insurance as traditional health insurance. H.R. 1304 would preserve self-insurance and:
- Reaffirm long-standing policies. Stop-loss insurance is not health insurance, and it has never been considered health insurance under federal law. H.R. 1304 would reaffirm this long-standing policy.
- Protect access to affordable health care coverage. By preserving self-insurance, workers and employers will continue to benefit from a health care plan model that has proven to lower costs and provide greater flexibility.
- Prevent bureaucratic overreach. Clarifying that regulators cannot redefine stop-loss insurance would prevent future administrations from limiting a popular health care option for workers and employers.
For a copy of the bill, click here.
For a fact sheet on the bill, click here.
Instead of preparing for the changes that were expected from the American Health Care Act (AHCA), employers now need to continue or resume their efforts to maintain compliance with the ACA. As House Speaker Ryan said, “I don’t know what else to say other than Obamacare is the law of the land. It’ll remain law of the land until it’s replaced,” he said. “We’re going to be living with Obamacare for the foreseeable future.”
Determining where we go from here seems to be anyone’s guess, but after watching the industry ebb and flow for decades, our best advice is to stay calm and carry on as self-funded health plans continue to cover an estimated 75% of the U.S. workforce.
ACA The Law of the Land
Until the Republican majority decides to try again or Obamacare implodes, as President Donald Trump and others say is inevitable, individuals and employers with 50 or more full-time employees will have to live with the Affordable Care Act. Many who thought the American Health Care Act (AHCA) meant the certain loss of coverage made possible by the ACA can breathe easier. Providers and employer groups, many of which have adopted self-funding in order to better cope with the added regulations of Obamacare, can take comfort in the fact that drastic change has been avoided, at least for the foreseeable future.
EBSO will be monitoring the events on Capitol Hill and will continue to provide updates as things arise. As always, thank you for being a valued Client and/or Business Partner.
Legislation expanding health savings accounts (HSAs) and flexible spending accounts (FSAs) has been introduced in Congress and assigned to committee in the Senate. Just a few of the proposed changes contained in the bills include renaming “High Deductible Health Plans” to “HSA-Eligible Health Plans”; allowing Medicare recipients to contribute to their HSAs and use their funds to cover a hospital admission deductible; and allowing distributions to be used for over-the-counter medications as well as prescription drugs.
While these proposed changes and others included in H.R. 4469 and Senate Bill S. 2449 have received a good amount of support from legislators and industry trade groups such as the American Bankers Association (ABA) and the ERISA Industry Committee (ERIC), no action has yet been taken.
According to studies by Accenture, the number of U.S. consumers using wearables or mobile apps to manage their health has doubled in just the past 2 years. One interesting fact is that while the vast majority of users are willing to share the data collected with their doctors, and many with their health plans, fewer than a third want the information shared with their employer.
Even though this issue also discusses the importance of reaching millennials, it seems an appropriate time to explore this topic from an even broader perspective. Studies like the 2015 Aflac Workforce Report show that more than 7 of 10 employees seldom, if ever, understand what is covered in their healthcare plan. On top of that, a USA Today analysis of government records shows that 1 in 5 invasive surgeries may be unnecessary. On the other side of the coin, we know that when employees fail to obtain the preventive care they need, serious health risks and the potential for even larger health claims exist.
So with the value of your health benefit plan and its cost control and wellness enhancement features hanging in the balance, let’s consider a few thoughts that may motivate your employees to care enough about their benefits to make smarter healthcare decisions.
Timing is Everything – It isn’t a lack of information keeping people from understanding their benefits; it’s how and when people are choosing to get their information. While benefit booklets and plan documents are required, they simply can’t compete with push notifications, text alerts and other “real time” communication. In a world where too many people still pay little or no attention to their healthcare plan until they need it – plan, provider and cost-related information must be more personal and more accessible.
Consumers Rule The Day – In many areas of their lives, your employees are behaving as informed and empowered consumers every day. While this behavior isn’t carrying over to healthcare as quickly as we would like, new products and services are making actionable information easily accessible to both employees and employers. HealthiestYou and Real Time Choices are just two services capable of delivering more personalized, comparative data to individuals when they are making a healthcare decision.
One Stop Shop – More and more TPAs are taking steps to offer one integrated, online “hub” where members can access their benefit plan, claims data and much more. From network providers to cost and quality comparisons to individualized wellness incentives and rewards, the ability to provide one place where members can find the information they want is critical.
As these and other technologies continue to evolve, they will do more and more to connect your employees with the right information at the right time – the real key to engaging employees in their health benefits.
If you’re asking why the number of young adults enrolling in health plans post-ACA is falling, consider economics. Not only have many young people remained on their parent’s plan to age 26, but student debt and a slow, economic recovery have also taken a toll. This is especially troubling when you consider that people age 18 to 34 will represent half of our workforce by 2020 and 75% by 2025.
While economics is involved, we must know where to find young people before we can move them to act, so taking time to learn their likes, dislikes and habits is a must. And no habit is more popular among young adults than media. Individuals age 18 to 36 spend nearly 18 hours a day using smart phones to engage in social media, music, videos and gaming. They’re accustomed to shopping online for virtually everything and they expect quick answers with comparative pricing.
Keeping things simple is critical, as shown by a 2015 National Bureau of Economic Research study that revealed that offering just one health plan will produce better results than offering many options.
Millennials love sight and sound, so short, light or funny educational videos that simplify benefits or wellness may go a long way. Lasting relationships will develop if education and communication are ongoing. The time to get serious is now, because they are here and chances are most will expect to manage their health and healthcare the same way they do everything else – with technology.