By gulfsouthb32553561, Dec 12 2018 10:47PM
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Many of your employer clients feel stuck without options when it comes to offering a health plan to their employees, unsure of where to turn for advice about cutting costs, without cutting benefits. Enter the Employer Bill of Rights.
Across the country, inflated medical costs and balance billing for medical care have become the norm, leaving businesses to pick up the hefty tab or pass along the costs to their employees. Many of your employer clients feel stuck without options when it comes to offering a health plan to their employees, unsure of where to turn for advice about cutting costs, without cutting benefits.
Enter the Employer Bill of Rights, an initiative created to inspire and empower businesses to understand and exercise their rights as they make health plan decisions and manage health care costs within today’s complex health care system — decisions which affect their businesses and the employees who rely on these critical benefits. Businesses across the country can rally behind these rights and take an activist role as they seek alternatives to the status quo.
Know your rights
The Employer Bill of Rights is rooted in the mission that businesses have the right to:
receive transparent information about the costs of health care services
audit medical bills
defend fair health care payments
make direct connections with providers to achieve agreeable outcomes
Let’s take a look at the eight rights that make up the Employer Bill of Rights:
Pay a fair amount for health care.
Paying for health care should be treated like any other business expense — especially since it often represents the second largest operating expense after employee wages. Employers do not have to accept the status quo for their health plan and pay medical expenses that are inflated.
Know what health care services actually cost.
A traditional PPO health plan typically leaves the employer in the dark about how plan parameters were set by the insurer and medical provider. Businesses have a right to know the cost of medical services.
Audit medical bills.
Billing mistakes and inflation of medical charges are common. Businesses and individuals have a right to carefully evaluate health care expenses. A line-by-line auditing of medical bills helps ensure the charges are accurate and fair.
Explore your health plan options.
By partnering with an informed and experienced health care consultant, employers can discover health plan options beyond the traditional PPO model. A self-funded health plan, where employers pay for medical claims as services are rendered instead of providing ongoing and advanced payments to an insurance company, can take employers on the path toward more control over healthcare spending.
Offer your employees a comprehensive and affordable benefits program.
Employees count on their employer-sponsored health plans to be reliable and financially feasible. Employers have a right to offer health care solutions that minimize the financial burden on the plan member.
Design a health plan to meet your unique needs.
The best health plans are well-rounded and flexible. Employers have the right to customize their health plan to determine the approach that best suits the needs of their business and team. Unlike traditional health plans, self-funded plans are customizable.
Defend the best interests of your business and your employees when paying for health care.
Surprise medical bills and inflated prices are common, but health care finances do not have to be handled alone. Employers and individuals have the right to access advocacy services that support fair and reasonable health care payments and help employers meet their fiduciary responsibility.
Make direct connections with providers and health systems.
Fair outcomes can be achieved when people work together. By creating direct partnerships with providers and health systems in their communities, employers can become good stewards of health care by building bridges and driving quality health care experiences for all.
Traditional plans are not serving employers and employees
The Employer Bill of Rights is a stark contrast to the traditional health insurance experience. When employers embrace these rights, many may realize that the plans they offer are not serving their employees well and are costing their businesses too much money.
More than one-quarter of insured adults, about 41 million people, are “underinsured.” Health plans hardly cover plan members against exorbitant out-of-pocket costs or deductibles. This is creating an unsustainable burden for employers and employees alike.
Unexpected medical bills are a top concern for Americans, with 4 in 10 insured adults reporting that they have received an unexpected medical bill in the past year, according to the Kaiser Family Foundation.
Employer health care costs have risen 24 percent between 2001 and 2015, according to the Society for Human Resource Management.
Alternatives to PPO plans are showing tremendous promise and gaining nationwide attention. The California Public Employees’ Retirement System (CalPERS) manages the largest public employee benefit fund in the U.S. After adapting a reference-based pricing program in 2013, the organization saw a $5.5 million cost savings over a two-year period.
And CalPERS isn’t alone. Organizations of every size are looking to make changes, including the big three of Amazon, Berkshire Hathaway and JP Morgan Chase, who recently established a new health venture to improve the cost for healthcare for their employees.
The path to choosing transparency
Businesses can stand up against out-of-control costs by adopting the Employer Bill of Rights and turning away from traditional insurance plans, which have failed to adapt to the changing health care landscape.
One option for a transparent solution for decision-makers seeking an alternative to PPOs is reference-based pricing, also known as metric-based pricing.
Reference-based pricing is a bottom-up approach to health care charges that starts with the actual cost amount and adds a fair profit margin for the provider to calculate the bill. This is contrary to a PPO model, which starts at the top with a potentially inflated price from a facility’s chargemaster and offers a fluctuating, inconsistent discount.
Self-funded employers looking to make a change can consider a reference-based pricing plan to save up to 30 percent in costs in their first year and rest assured knowing they are working with transparent providers.
Steve Kelly is the co-founder and CEO of ELAP Services, a leading health care solution for self-funded employers based in Wayne, Pa. He is a recognized expert in the insurance, employee benefits and risk management industry, bringing more than three decades of experience solving his clients’ complex healthcare challenges.
It's open enrollment season, which for many workers, might not mean much. That's a costly misconception.
Nearly half of all employees spend 30 minutes or less reviewing their benefits before enrolling, according to recent research by employee benefits provider Unum.
The vast majority, or 93 percent, choose the same benefits year after year rather than making changes during the open enrollment period, according to a separate WorkForces report by Aflac.
"The decisions you make during open enrollment season can have a financial impact on you for the entire year," said Julie Stich, an associate vice president at the International Foundation of Employee Benefit Plans.
Michael Simonds, the president and CEO of Unum, recommends considering short-term needs, such as braces for your child, and the long term, as in life insurance. "This is where being informed is important," he said.
At the very least, workers should review their coverage to make sure it is still their best option.
This year, in particular, there could also be some changes to plans that are offered and the details of those offerings, making it even more important to pay attention.
Here are a few of the things to look out for:
1. Health insurance
For starters, health insurance is the most significant component of your benefits. Be aware that premiums — and deductibles — are going up.
Annual family premiums for employer-sponsored health insurance rose 5 percent, to an average $19,616 this year, according to the 2018 Kaiser Family Foundation Employer Health Benefits survey.
On average, workers this year are contributing $5,547 toward the cost of family coverage, while employers pay the rest.
In addition, more workers now have a deductible, and that deductible is rising. The average single deductible is $1,573 for workers who have one, up from last year.
"Health costs don't rise in a vacuum," said Kaiser foundation President and CEO Drew Altman, in a statement. "As long as out-of-pocket costs for deductibles, drugs, surprise bills and more continue to outpace wage growth, people will be frustrated by their medical bills and see health costs as huge pocketbook and political issues."
2. Health savings accounts
On the upside, contribution caps to health savings accounts, which pair with high-deductible health-insurance plans, are also heading higher.
For 2018, employees and employers can contribute a total of up to $3,450 for individual coverage and up to $6,900 for family coverage. In 2019, those totals will increase to $3,500 for individual coverage and $7,000 for family coverage, according to the IRS.
The average annual employer contribution to health savings accounts, or HSAs, is around $600 for individual employees, and $1,250 for employee family plans, according to the benefits consulting firm Zenefits.
Check to see if your employer offers a flat contribution or matching funds. Ideally, aim to max out those contributions for the year, Stich said. Contributions then grow on a tax-free basis and account holders can take distributions to cover qualified medical expenses.
(For this reason, more Americans are also using HSAs to supplement their retirement savings.)
3. Life insurance
Even if you already have a policy through work, it could be a fraction of what you need to protect young children or other dependents. Experts say the policy should cover at least one year's worth of income, at the bare minimum.
Consider what's the right amount for you, then weigh whether you want to buy additional coverage, or supplemental insurance, through your workplace group plan or shop for your own individual term life insurance policy, a move many advisors recommend.
It may not be as expensive as you think. Getting $50,000 worth of coverage on a 20-year term-life insurance policy would cost a healthy 40-year-old woman about $180 a year and about $200 a year for a man who is the same age, according to PolicyGenius.com.
4. Disability insurance
Disability insurance is often the most overlooked employee benefit, according to Unum's Simonds. However, these plans can help replace a portion of your paycheck if you get sick or injured and can't work.
More than 1 in 4 of today's 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach retirement, Unum found.
In general, plans will pay 40 percent to 60 percent of your salary when you need it and they are considered the most cost-effective form of income protection you can buy.
In most cases, a long-term disability insurance policy will cost 1 percent to 3 percent of your annual salary, starting at around $25 a month and going as high as $500 a month, according to PolicyGenius.com.
Plus, the younger and healthier you are, the cheaper it will be.
While you are at it, see if your employer offers other voluntary benefits, such as auto, homeowners or long-term care insurance, Stich advised. The firm may have been able to negotiate a discounted rate.
Less than two weeks before the midterm elections, President Donald Trump on Thursday announced a plan that he said would stop unfair practices that force Americans to pay higher prices for prescriptions than people do for the same drugs in other countries.
"We are taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country," Trump said during a brief speech at the Department of Health and Human Services.
"Same company. Same box. Same pill. Made in the exact same location, and you would go to some countries and it would be 20 percent of the cost of what we pay," said Trump, who predicted the plan will save Americans billions of dollars in drug costs. "We're fixing it."
Trump has long promised sweeping action to attack drug prices, both as president and when he was running for the White House. He made his announcement just ahead of the Nov. 6 elections. Health care is high among voters' concerns.
Under a proposal announced by the Department of Health and Human Services, payment for certain drugs administered in doctors' offices would shift to a level based on international prices.
Drugmakers are sure to push back, arguing it would be tantamount to price controls. And Trump is linking the prices Americans complain about to one of his longstanding grievances: foreign countries the president says are taking advantage of U.S. research breakthroughs.
The department says overall savings to U.S. programs like Medicare and to patients would total $17.2 billion over five years.
The proposal is structured as an experiment and would apply to half the country. Officials said they're seeking input on how to select the areas of the country that will take part in the new pricing system. HHS Secretary Alex Azar said politics would have nothing to do with it.
"For decades, other countries have rigged the system so American patients are charged much more — in some cases much, much more — for the exact same drug," Trump said. "In other words, Americans pay more so other countries can pay less. It's wrong. It's unfair."
In advance of his speech, HHS released a report that found U.S. prices for the top drugs administered in doctors' offices are nearly twice as high as in foreign countries. The list includes many cancer drugs. Medicare pays directly for them under its "Part B" coverage for outpatient care.
Azar said Medicare spent about $8 billion more for drugs in the study than it would have if the prices were scaled to international prices. Azar said more plans were being developed to beat back the high cost of prescription drugs.
"This is not the end of the road, the end of the journey," he said. "There is more coming."
Any push to dramatically lower prices here would meet resistance not only from drugmakers but from doctors, two of the most powerful lobbies.
Trump has harshly criticized the pharmaceutical industry, once asserting that the companies were "getting away with murder," a comment that sent pharmaceutical stocks tumbling. But it's largely been business as usual for drugmakers even as Trump has predicted "massive" voluntary price cuts.
A recent Associated Press analysis of prices for brand-name drugs found far more increases than cuts in the first seven months of this year. The analysis found 96 price hikes for every price cut. The number of increases slowed somewhat and they were not quite as steep as in past years, the AP found.
As Dave Chase writes in “The CEO’s Guide to Restoring the American Dream,” ”Step one [in fixing the health care system] is to accept that you run a health care business. It’s likely your second largest operating expense after payroll. Just ask your CFO. You’d probably prefer not to run this business, but it’s there, whether you like it or not.”
Yet even if they acknowledge this truth, most CEOs, CFOs and COOs are too consumed with running their businesses to take step two; that is, to spend the time and emotional energy required to learn about the specific ways in which health care in America is broken. As a result, their health care strategy remains the same year after year. They continue to accept the increase (typically around 9 percent) in insurance premiums that their benefits broker negotiates for them and continue to transfer health care costs to their employees by raising deductibles.
This strategy isn’t sustainable. According to a survey from Milliman, the cost of health care for a typical family of four covered by an average employer-sponsored preferred provider organization (PPO) plan in 2017 was $26,944.
Further, the survey notes, of the $26,944 spent by a family of four, $11,685 is paid by the employee—a combination of $7,151 in payroll deductions for the premium and $4,534 in out-of-pocket costs. That comes to 43 percent of expenses paid by the employee compared to 57 percent by the employer.
Why is health insurance so expensive? Because health care is so expensive. But why is health care so expensive? Contrary to popular opinion, it’s not because the unit cost of health care has increased. In Chase’s book, Jeanne Pinder says, “cash or negotiated self-pay prices for many procedures vary little from year to year.” Health care is expensive because third-party insurance carriers have kept the true cost of health care opaque so that consumers can’t comparison shop. And it’s expensive because there’s an epidemic of unnecessary health care overutilization.
For example, in 2010, $29.7 billion was spent in hospitalizing patients for potentially preventable complications of conditions like diabetes, congestive heart failure, and osteoarthritis. These are only three conditions among many that primary care doctors are expert at managing. So why the failure to manage them effectively in an outpatient setting? Because patients lack timely access to primary care. And even once they gain that access, their primary care physicians have too little time to spend with them. According to Merritt-Hawkins, in 2017, the average length of time primary care appointments last is only 15.7 minutes.
Unlike fee-for-service primary care, direct primary care offers 24/7 access to and a surplus of time with primary care physicians—often an hour or more at each visit. As a result, studies show that patients enrolled in DPC practices have 59 percent fewer ER visits, spend 30 percent fewer days admitted to the hospital, are referred to specialists 62 percent less often, have 65 percent fewer radiology exams, and 80 percent fewer surgeries. Because of this, some employers who self-insure—and who are therefore responsible for paying their employees’ medical bills out of their own pockets—have saved as much as $260 per member per month on health care expenses.
In sum, companies that commit to spending more money upfront on primary care (which represents perhaps 2 percent to 5 percent of a company’s total health care spend) can expect to spend far less on downstream care like ER visits, specialty visits, surgeries, and x-rays, which represent perhaps 40 percent to 60 percent of a company’s total health care spend.
Yet the ability to rein in health care costs isn’t the only thing DPC offers employers; it also offers them a way to win the talent war. According to McKinsey senior partners Scott Keller and Mary Meaney: “A recent study of more than 600,000 researchers, entertainers, politicians, and athletes found that high performers are 400 percent more productive than average ones. Studies of businesses not only show similar results, but also reveal that the gap rises with a job’s complexity. In highly complex occupations—the information- and interaction-intensive work of managers, software developers, and the like—high performers are an astounding 800 percent more productive.”
High-quality employees are in high demand. Attracting and retaining the best talent can make the difference between a company succeeding and failing. Workers carefully compare the different benefit packages that prospective employers offer them. Few companies are able to use their health benefit packages to entice prospective employees.
But with DPC, this changes. Most companies cover the cost of the membership fee for their employees, which means employees can now enjoy a direct relationship with a primary care doctor who responds to their calls, emails, and texts immediately; who gets employees in for office visits the same day or the next day as many times as necessary; and who can spend as much time with employees as they need—all at no cost to employees. What employee wouldn’t consider that the best health benefit they’ve ever been given?
Direct primary care doesn’t just improve access and quality of care, it reduces the cost of care by reducing unnecessary downstream health care over-utilization. For a self-insured company that pays its employees’ medical bills out of its own pocket, DPC represents not only one of the best ways to control costs, but also by providing better service to its employees, a way to attract and retain the best talent.