health plans – Page 2 – ScriptSourcing

Short-term Health Plans Skimp on Medical Payments

A new report by the trade publication Modern Healthcare shows just how little short-term care plans spend on enrollees’ medical claims.

The report found that some plans spent as little as 9 cents of every premium dollar they collected on medical care.

The average paid out among the short-term plans analyzed in a report by the National Association of Insurance Commissioners was 39.2%. That’s a far cry from the 80% of premiums health plans are required to spend on medical care to comply with the Affordable Care Act.

The figures shine a harsh light on just how little short-term health plan policyholders benefit from the plans they purchase.

The Trump administration issued regulations in 2018 that extended the amount of time someone can enroll in a short-term health plan to 12 months, and policyholders can renew coverage for a maximum of 36 months.

These plans do not have to comport with the ACA, like not covering 10 essential benefits and not having to cover pre-existing conditions – and they can even exclude coverage for medications.

2018 short-term health plan medical outlays*

Cambia Health Solutions: 9.3%
Spectrum Health: 36.1%
Genève Holdings: 36.2%
UnitedHealth Group: 37.3%
Medical Mutual of Ohio: 40.4%
Blue Cross and Blue Shield of SC: 44.2%
* As a percentage of premium charged

The above chart means that for every dollar collected in premium, the average short-term plan spent 39 cents on medical care for policyholders – with the rest spent on administration or kept as profit.

Short-term plans usually lack the consumer protections found in ACA-compliant plans and they have gaps in coverage that may not be readily apparent in marketing materials, which makes it difficult to compare plans and understand the full scope of coverage.

Importantly, as stated above, they are not required to and usually don’t cover the 10 essential health benefits that the ACA requires compliant plans to cover at no cost to the enrollee.

This scant coverage makes these plans much cheaper than ACA-compliant plans.

Here are some of the features of short-term plans that ACA-compliant plans are not permitted to offer:

Use health histories to determine who can get coverage – Applicants for short-term plans must often answer a health questionnaire used to screen out applicants with symptoms of an illness or condition – even if not yet diagnosed or treated. Some plans also exclude coverage for conditions for which medical advice, diagnosis, care or treatment was recommended or received in the prior 12 months.

Exclude key service categories from covered benefits – Few if any short-term plans cover maternity. Prescription drugs are not always covered, or they are only partially covered. Some plans exclude coverage for mental health, substance use disorder services, and tobacco cessation treatment.

No pre-existing conditions – Few short-term plans cover any pre-existing conditions. Typically, they cover only what’s listed in the Schedule of Benefits. If one of those is a pre-existing condition, it will likely have a cap of no more than $30,000. Also, insurers will often deny claims or cancel coverage for conditions they consider to be pre-existing.

Covered services limited – Many short-term plans have covered benefit limits like:

$1,000 per day for a hospital room and board
$1,250 a day for intensive care
$50 a day for doctor visits while in hospital
Total benefits are often capped at little more than $100,000 per year.

Renewal not guaranteed – Short-term plans will rarely guarantee renewal. If an enrollee suddenly develops a new health condition, the plan will likely not renew them.

Small Employers Can Reimburse for Medicare Part B, D Premiums

As the workforce ages and many employers want to keep on baby-boomer staff who have the experience and institutional knowledge that is irreplaceable, one issue that always comes up is how to handle health insurance.

Once your older workers reach the age of eligibility for Medicare, under current law you can help them pay for Part B and D premiums with a Medicare Premium Reimbursement Arrangement. These types of arrangements became legal after legislation was signed into law in 2013 to help employers provide benefits to their Medicare-eligible staff.

But the issue surfaced again recently when the Trump administration came out with new guidance for health reimbursement arrangements that paves the way for employers to set up HRAs to reimburse staff for health premiums in their personal (not company group) health plans.

Anybody who is about to turn 65 has a six-month period to sign up for basic Medicare, but if they want additional coverage they can pay for Medicare supplemental coverage such as Parts B and D.

Part B covers two types of services:

Medically necessary services: Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.

Preventive services: Health care to prevent illness (like the flu) or detect it at an early stage, when treatment is most likely to work best.

Part D, meanwhile, covers prescription drug costs.

The dilemma for employers has often been whether to keep the Medicare-eligible employee on the company health plan or cut them free on Medicare.

Smaller employers – those with 20 full-time-equivalent employees – have the option to open a Medicare Premium Reimbursement Arrangement for those employees if they are coming off a group health plan and into Medicare.

For small employers, it’s legal to set up an arrangement like that, as long as doing so is at the employee’s discretion. Employers are not allowed to push an employee into a Medicare Premium Reimbursement Arrangement in order to get them off the company’s health plan.

The good news for employers is that they often can reimburse their employees in full for Part B and D, as well as Medicare Supplement, and still pay less than they would pay in group employee premiums alone.

On top of that, the employee gets a lower deductible and overall out-of-pocket experience with less, if any, premium contribution.

What you need to know

Here’s what you should know if you’re considering one of these arrangements:

A Medicare reimbursement arrangement is one where the employer reimburses some or all of Medicare part B or D premiums for employees, as long as the employer’s payment plan is integrated with the group’s health plan.

To be integrated with the group health plan:

The employer must offer a minimum-value group health plan,
The employee must be enrolled in Medicare Parts A and B,
The plan must only available to employees enrolled in Medicare Parts A and B, or D, and
The reimbursement is limited to Medicare Parts B or D, including Medigap premiums.

Note: Certain employers are subject to Medicare Secondary Payer rules that prohibit incentives to the Medicare-eligible population.

New Rule Allows Employers to Pay Workers to Buy Their Own Health Coverage

The Trump administration has issued new rules that would allow employers to provide workers with funds in health reimbursement accounts (HRAs) that can be used to purchase health insurance on the individual market.

The rule reverses a long-standing part of the Affordable Care Act that carried hefty fines of up to $36,500 a year per employee for applicable large employers that are caught providing funds to workers so they can buy insurance.

The rule was put in place to keep employers from shunting unhealthy or older workers from their group health plans into private insurance and government-run marketplaces.

Under the rules issued by the Departments of Health and Human Services, Labor and Treasury, employers would be authorized to fund, on a pre-tax basis, health reimbursement funds that to buy ACA-compliant plans. The new rules take effect Jan. 1, 2020.

With the final rules written in a way to keep employers from trying to reduce their group benefit costs by sending sicker and older workers into the individual market, HHS noted in a press release announcing the rule that it would closely monitor employers to make sure this type of adverse selection doesn’t occur.

Typically, HRAs have only been allowed to be used to reimburse workers for out-of-pocket medical expenses. This rule allows them to also be used to pay for health insurance premiums for coverage that a worker may secure on their own.

’Integration’ conditions

The regulation permits an HRA to be “integrated” with certain qualifying individual health plan coverage. In order to be integrated with individual market coverage, the HRA must meet several conditions:

Any individual covered by the HRA must be enrolled in health insurance coverage purchased in the individual market, and must substantiate and verify that they have such coverage;
The employer may not offer the same class of individuals both an HRA and a “traditional group health plan”;
The employer must offer the HRA on the same terms to all employees in a “class”;
Employees must have the ability to opt out of receiving the HRA;
Employers must provide a detailed notice to employees on how the HRAs work;
Employers may not create a class of employees younger than age 25, whom they might want to keep in their group plan because they’re healthier.
For employers with one to 100 employees, a class cannot have less than 10 employees; for employers with 100 to 200 employees, the minimum class size is 10% of the workforce; and for employers with 200 or more employees, the minimum class size is 20 employees.

While the HRA money can be used mostly for buying plans that meet ACA requirements, employers under the rule can establish a special type of “excepted benefit” HRA for employees who want to buy less expensive short-term plans that do not comply with the ACA. The contribution for such plans would be capped at $1,800 a year.

Under the ACA, employers with 50 or more full-time workers (applicable large employers) must provide their employees with health insurance that covers 10 essential minimum benefits and must be “affordable.”

Under the new rule, an applicable large employer could meet their obligation if they provide adequate HRA contributions for employees to buy individual coverage.

New Rule Allows Employers to Pay Workers to Buy Their Own Health Coverage

The rule was put in place to keep employers from shunting unhealthy or older workers from their group health plans into private insurance and government-run marketplaces.

’Integration’ conditions

Any individual covered by the HRA must be enrolled in health insurance coverage purchased in the individual market, and must substantiate and verify that they have such coverage;
The employer may not offer the same class of individuals both an HRA and a “traditional group health plan”;
The employer must offer the HRA on the same terms to all employees in a “class”;
Employees must have the ability to opt out of receiving the HRA;
Employers must provide a detailed notice to employees on how the HRAs work;
Employers may not create a class of employees younger than age 25, whom they might want to keep in their group plan because they’re healthier.
For employers with one to 100 employees, a class cannot have less than 10 employees; for employers with 100 to 200 employees, the minimum class size is 10% of the workforce; and for employers with 200 or more employees, the minimum class size is 20 employees.

Under the new rule, an applicable large employer could meet their obligation if they provide adequate HRA contributions for employees to buy individual coverage.

Ohio Auditor’s Report on PBMs Sparks Changes

An audit carried out for Ohio Medicaid found that large pharmacy benefit managers that contract with the state’s Medicaid program have been pocketing a larger and larger share of drug pricing.

In fact, PBMs charged Ohio Medicaid plans 31% more for generic prescriptions than the amount they paid pharmacists for the drugs, the audit found, shedding light on a practice that observers say is being mirrored throughout the country.

The auditor found that the two largest PBMs operating in the state billed Medicaid managed-care plans $223.7 million more for prescription drugs than they paid pharmacy providers in 2017.

The report comes as pressure grows on PBMs to be more transparent about their pricing and costs amid complaints by pharmacies that are barely breaking even or losing money due to the tough contracts they have to enter into with PBMs. Many critics say that PBMs are not passing on the savings to payers when they negotiate lower contracts with pharmacies.

“We know that Ohio is not alone,” Ernie Boy, executive director of the Ohio Pharmacy Association, said in a prepared statement. “Every state and every payer in the country is grappling with these overinflated costs.”

What’s going on

Medicaid doesn’t directly pay pharmacists. Ohio Medicaid pays five private insurance companies to manage Medicaid plans for the state. The insurance companies contract out pharmacy benefits to middlemen, which pay pharmacists to fill prescriptions.

Medicaid and most health plans contract with PBMs to essentially run the drug portion of the health insurance equation. They are supposed to negotiate volume discounts with drug-makers and rates with pharmacies to reduce the overall drug spend by the payers.

PBMs make a good deal of their money from a growing “spread” between what the PBM pays pharmacies and what it charges payers (in this case, the state Medicaid program). The PBM keeps the spread, but most PBMs are not transparent about how much the spread is, leaving both the pharmacies and the payers in the dark.

According to the report, the overall spread in 2017 in Ohio was $224.8 million – with an average spread of 8.9% per prescription. Generic drugs, which comprise 86% of Medicaid prescriptions in Ohio and for which pricing is most opaque, accounted for an overwhelming majority of the spread.

The report found that during the entire study period:

The average spread was $5.71 per prescription.
The average spread for brand-name prescriptions was $1.85.
The average spread for generic prescriptions was $6.14.
The average spread for specialty drugs was $33.49.

Generic drugs account for 86% of Medicaid prescription claims in Ohio.

The auditor stated in its report that PBMs’ administrative fees typically range from $0.95 to $1.90 per prescription.

“Although this figure may not include all of services performed by a (pharmacy benefit manager), it suggests Ohio’s current spread may be excessive and warrants the state taking further action to mitigate the impact on the Medicaid program,” the report stated.

As part of its findings, the auditor noted that pharmacies in Ohio have been shuttering at a brisk pace since Medicaid PBMs have been cutting how much they reimburse them for medications.

Between 2013 and 2017, some 371 pharmacies closed in Ohio, coinciding with significant reimbursement reductions in their PBM contracts. The majority of those closures have taken place since 2016.

As a result of the audit, Ohio’s Medicaid department directed its managed-care organizations to quit their contracts with PBMs, citing the opaque pricing practices.

The state’s five managed-care plans were required to enter into new contracts with companies that were able to manage pharmacy services using a more transparent pricing model by the start of 2019.

Getting a Head Start on Open Enrollment

As open enrollment is right around the corner, now is the time to gear up to maximize employee enrollment, help them make the best selections for their own personal circumstances, and stay compliant with relevant laws and regulations.

It’s a lot to take in as uncertainty has been a constant during the last many years with the onset of the Affordable Care Act, and now that its future is hazy at best.

Still, since health coverage and other employee benefits are an important part of your compensation package – and your competitive edge for talent – it’s important that you get it right.

Here are some pointers to make open enrollment fruitful for your staff and your organization.

Review what you did last year

Review the results of the previous year’s open enrollment efforts to make sure the process and the perks remain relevant and useful to workers. How effective were various approaches and communication channels, and did people give any feedback about the process itself?

Start early with notifications

You should give your employees notice at least a month before open enrollment to let them know it’s coming, as well as provide them with information on the various plans you are offering. Encourage them to read the information and come to your human resources point person with questions.

Help them sort through plans

You should be able to help them figure out which plan features fit their needs, and how much the plans will cost them out of their paycheck. Use technology to your advantage, particularly any registration portal that your plan provider offers. Provide a single landing page for all enrollment applications.

That said, you should hold meetings on the plans and also put notices in your employees’ paycheck envelopes.

Plan materials

Communicate to your staff any changes to a health plan’s benefits for the 2019 plan year through an updated summary plan description or a summary of material modifications.

Confirm that their open enrollment materials contain certain required participant notices, when applicable – such as the summary of benefits and coverage.

Check grandfathered status

A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010 and is thus exempt from some of the law’s requirements. If you make certain changes to your plan that go beyond permitted guidelines, the plan is no longer grandfathered.

If you have a grandfathered plan, talk to us to confirm whether it will maintain its grandfathered status for the 2019 plan year. If it is, you must notify your employees of the plan status. If it’s not, you need to confirm with us that your plan comports with the ACA in terms of benefits offered.

ACA affordability standard

Under the ACA’s employer shared responsibility rules, applicable large employers must offer “affordable” plans, based on a percentage of the employee’s household income. For plan years that begin on or after Jan. 1, 2019, the affordability percentage is 9.86% of household income. At least one of your plans must meet this threshold.

Out-of-pocket maximum

The ACA’s out-of-pocket maximum applies to all non-grandfathered group health plans. The limit for 2019 plans is $7,900 for self-only coverage and $15,800 for family coverage.

Make sure your plan is in line with these figures.

Other notices

Consider also including the following notices:

Initial COBRA notice
HIPAA notice. This may be included in the plan’s summary plan description
Notice of HIPAA special enrollment rights
HIPAA privacy notice
Summary plan description
Medicare Part D notices

Get spouses involved

Benefits enrollment is a family affair, so getting spouses involved is critical. You should encourage your employees to share the health plan information with their spouses so they can make informed decisions on their health insurance together.

Also, encourage any spouses who have questions to schedule an appointment to get questions answered.