When the independent think tank finds that on average, prices paid to hospitals by younger, healthier policyholders were 100 percent higher than what Medicare would have paid for the same procedures, it’s easy to understand the impact that payment contracts based on what Medicare pays can have on health plan costs.
In contrast to traditional fully insured plans, self-funded health plans with reference based pricing (RBP) enable consumers to learn the cost of treatment before they receive it. This is the advantage of basing provider payments on publicly available cost and quality data rather than arbitrary network discounts. And because Medicare varies its pricing by geographic region, providers are compensated fairly, and medical price inflation can be controlled.
From Big to Small
While very large employers were early adopters, the model is becoming far more commonplace among smaller groups that partially self-fund. TPAs are helping some of these plans realize overall savings in the 20 percent range and for a plan with 300 members, this can mean annual savings of $1 million or more.
In a marketplace that has lacked transparency and accountability for far too long, Medicare reference is proving to be not only a market disruptor, but an approach that can help employer-sponsored health benefits thrive. Contact us if you want to learn more about how a RBP plan could work for you.
With many patients still worrying about contracting COVID-19 by visiting a doctor or pharmacy, large healthcare organizations are sponsoring ad campaigns encouraging people to return to their medical providers. Print ads, TV commercials and social media ads tell people that returning to their doctor for regular checkups, emergencies or diagnostic tests is not only important, but safe due to strict cleaning routines and office protocols that eliminate shared waiting areas. Providers and payers fear that leaving conditions untreated will result in more serious and costly medical concerns in the future.
With nearly 40 million workers laid off or furloughed as a result of the Coronavirus, many organizations have urged Congress to expand COBRA coverage. Most of their concerns are focused on encouraging Congress to subsidize COBRA premiums for these workers so that existing health conditions will not get worse because care is delayed.
To date, the Department of Labor and the IRS have extended the time period workers have to decide to enroll in COBRA. With the President’s order setting the end of the national emergency for COVID-19 at June 29th, individuals would have until August 28th to enroll in COBRA. DOL and IRS have also given workers 30 days beyond the end of the national emergency to pay their COBRA premiums for March, April, May and June. Should the Administration decide to extend the national emergency, these timelines would be adjusted accordingly.
Even though Labor Department reports show that fewer than 15% of private sector employees are covered by paid leave programs, more states are looking for ways to help employees cope with the difficulties of caring for family members of all ages. In addition to California, New Jersey and Rhode Island that have had programs in place for a long time, New York, Washington and the District of Columbia have passed similar laws.
While most private sector programs provide paid maternity and parental leave, more and more employers are looking for ways to help employees caring for elderly parents or family members facing serious health conditions. An increasing number of employers are providing on-site daycare facilities to reduce absenteeism. Those that lack the facilities are lowering stress levels for parents by helping to subsidize their daycare expenses.
As more and more employer-sponsored health plans become self-funded, the trend from PPOs to direct provider contracting is growing. High quality health plans continue to demonstrate that direct contracting promotes a more level playing field where both parties can agree on pricing that is fair rather than trying to determine the real value of network discounts.
The Kaiser Family Foundation employee health benefits survey for 2019 shows that the cost of annual premiums for employer-sponsored health insurance plans have reached $20,576. While there are differences between small and large employer groups, costs are rising faster than wages for both and average contributions by employees have reached $1,242 for single coverage and more than $6,000 for families. And while wages have increased by 26% in the past decade, contributions to healthcare premiums have gone up 71%.
A recent study in the State of Texas revealed that when health systems acquire physician practices, patient costs go up. The study was in response to a wave of consolidations across all facets of healthcare, from institutions to individual physician practices. Results showed that the share of physician practices owned by hospitals in Texas rose from 14% in 2012 to 29% in 2016.
When two years of claims data was analyzed, it showed that PPO members spent nearly 6% more when treated by doctors in hospital-owned practices, versus physician-owned practices. A breakdown revealed that higher costs were attributable to additional services being provided rather than higher fees. Higher costs for imaging, durable medical equipment and operating and recovery room use were common contributors, with no evidence of improved quality shown.
It’s doubtful that many technology companies are concerned about employees nearing age 65. Other employers, however, may want to brush up on Medicare eligibility in order to help older workers understand their options and avoid any potential gap in coverage. Here are just a few Medicare-related concerns:
For employees who will lose access to employer-sponsored group health coverage at age 65 or who choose to sign up for Medicare upon becoming eligible, the Initial Enrollment Period (IEP) is 3 months before to 3 months after the month they turn 65.
Medicare-eligible workers who leave employment with a retiree health plan or COBRA coverage are classified as “former workers” and therefore need to enroll in Medicare during their IEP.
Employees who have enrolled in Social Security before their 65th birthday will automatically be enrolled in Medicare Parts A and B. In order to avoid paying for 2 health plans, they may need to inform the Social Security Administration that they do not want Medicare Part B at this time.
Finally, for companies with fewer than 20 employees, Medicare becomes primary coverage. Workers and/or their spouses who are 65 or older must enroll in Medicare Parts A & B.
While employees must enroll in Medicare on their own, a little help from HR can go a long way. When questions about Medicare eligibility and enrollment arise, never hesitate to encourage a visit to a local Social Security Administration office or Medicare.gov.
A survey of individual healthcare consumers shows that the lack of cost transparency is taking a big toll, with more than half of respondents saying they have passed on doctor visits or prescriptions because of cost. The vast majority of those foregoing treatment cite the cost of higher deductibles and copays as the top concern along with consistently rising prescription drug costs.
A Study by TIAA and the MIT Age Lab shows more than 44 million Americans account for some $1.5 trillion in outstanding student loans. Most borrowers are students, but surveys show that plenty of parents and family members are on the hook as well. While their circumstances vary, all are dealing with some level of financial stress.
Fortunately, an increasing number of employers are taking a more holistic view of wellness. And while most have long recognized the connection between stress and lost productivity, many are waking up to the fact that financial pressures are contributing to the stress.
Financial Education to the Rescue
SHRM says that to deal with the growing problem, more companies are enlisting the services of financial advisors. While counseling won’t directly attack their debt, it often helps families learn to cope with the problem. More large employers are allowing employees to convert a portion of their unused paid time off to debt reduction.
As an employer, anything you do to help will contribute to the overall financial well-being of your people. Just like other components of your wellness strategy, making employees more financially secure will enhance their overall quality of life while improving the culture and productivity of your organization.