Health Care Reform

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

Characteristics of Medical Providers.
McNutt, Larry; Benefits Magazine; v49 no4 pp 26-31 Apr 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A key component in the health care spending mix is data associated with care providers. The variety of providers is broad, covering large institutions, small clinics and individuals; in traditional settings, HMOs and alternative sites; and including a range of pharmacy and other ancillary services. The relationship between service, outcomes and cost is not entirely predictable but can be analyzed, given the right data. To be informative, that data must reflect administrative and clinical details and be carefully chosen for its potential to expose important information and lead to actionable change. Data analytics can reveal trends that can lead to plan design modifications for more effective use of plan resources.
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Other Recent Decisions.
Benefits Magazine; v49 no4 pp 68-70 Apr 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Contested withdrawal liability prompted the case of Plan Board of Sunkist Retirement Plan v. Harding & Leggett Inc. The defendant company argued the basis for the liability calculation was erroneous in three ways. The Ninth Circuit Court of Appeals found one point based on a clerical error but otherwise affirmed the plaintiff's assessment of withdrawal liability. In Trustees of the U.A. Local 125 Health and Welfare Plan et al. v. A'Hearn Plumbing & Heating Inc. et al. the District Court for the Northern District of Iowa refused to grant a company's motion for summary judgment, finding disputed issues of material fact that cloud the company's relationship with the primary defendant company. In International Union, United Automobile, Aerospace, and Agricultural Implement Works of America et al. v. Kelsey-Hayes Co. et al., the Eastern Michigan District Court ruled the plaintiff retirees, seeking determination of lifetime health benefits, were bound by a plant closing agreement that terminated the collective bargaining agreement. Whether the plant closing agreement applies to retirees must be decided through arbitration. In Boddicker v. Esurance Insurance Services Inc., the District of South Dakota awarded the plaintiff a statutory penalty of $22,700 after finding the defendant failed to send COBRA notice to the plaintiff. In Smith v. Stockwell Construction Co. Inc. et al., the plaintiff was the ex-wife of a profit sharing plan participant and the designated beneficiary. Upon the participant's death, the plan awarded benefits to the participant's father. The District Court for Western New York permitted the plaintiff's claim about producing plan documents and notifying her of her rights to move forward, while dismissing the defendants' motion to dismiss.
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Health Care: Study Finds 10 Percentage Point Drop in Employer Health Insurance Coverage.
Hansard, Sara; Daily Labor Report; no52 p A5 Mar 16, 2012; journal article

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Abstract : A study from the Center for Studying Health System Change reports that 53.5 percent of children and working age adults had health insurance through an employer in 2010, a ten percent drop since 2007. The report identified the recession of 2007 to 2009 as a key factor in the decline, combined with job losses and rising health care costs. Among adults making less than twice the federal poverty level, under one in four had employer-sponsored health insurance. The decline in coverage predominantly hit young adults up to age 27, families headed by a person with a high school education or less and employees of companies with fewer than 100 in their workforce. The loss of private coverage results in cost shifting to public resources, mostly Medicaid and the Children's Health Insurance Program.
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Drug Program Targets Costs.
Wojcik, Joanne; Business Insurance; v46 no11 p 6 Mar 12, 2012; journal article

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Abstract : An innovative drug insurance product is attracting self-funded midsized employers. EBC Rx LLC is offering Rx 'n Go, a mail order program under which employers pay for 90-day prescriptions for generic drugs. Employers note the lower cost and easy refills improves compliance with chronic condition treatment plans, potentially cutting long-term health care costs. Billing statements for the program provide drug utilization data to the employer, third-party administrator and/or pharmacy benefits manager (PBM) at no extra cost. Obstacles come from the fact that most PBM contracts prohibit employers from such outside arrangements, and there is no integration between data for drug utilization and other medical services or metrics.
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Retiree Benefits: Employees Increasingly Willing to Trade Pay for More Benefits, Towers Watson Finds.
Smith, Rhonda; Daily Labor Report; no41 p A5 Mar 1, 2012; journal article

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Abstract : A late 2011 Towers Watson survey of 3,074 U.S. workers revealed 53 percent would be willing to give up some pay in exchange for better retirement benefits. Fifty-five percent would give up some pay to have a more guaranteed retirement benefit, up from 46 percent in 2009. The desire for more retirement security is strongest among older individuals, women, low-paid workers and those in poorer health. Views toward health care benefits are similar, with 45 percent willing to pass on some pay in exchange for lower and controlled costs, up from 19 percent in 2008. Employers should consider ways to help employees cope with cost uncertainties, possibly offering advisers for financial planning and investment advice, debt control and budgeting consultations and health savings accounts.
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A Strategic Dose of Wellness.
Casselman, Lori; Benefits Canada; v36 no3 pp 10-11, 13-14, 16 Mar 2012; journal article

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Abstract : A Sun Life Wellness Institute survey of Canadian employers found that 97 percent of respondents agreed that employee health connects directly to corporate success, and 72 percent offer at least one wellness initiative to employees. The most common initiatives are low impact, with 70 percent offering flu vaccinations, 64 percent offering CPR training and 58 percent offering ergonomic work environments. Only 30 percent offered blood pressure screenings, and less than 20 percent offered wellness assessments. Significant results for a wellness program can be achieved with commitment from senior leadership, assessment of high priority risks for the organization, employee communication, effective incentives and continuous evaluation of the program.
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An Experiment Shows That a Well-Designed Report on Costs and Quality Can Help Consumers Choose High-Value Health Care.
Hibbard, Judith H.; Greene, Jessica; Sofaer, Shoshanna; Firminger, Kirsten; Hirsh, Judith; Health Affairs; v31 no3 pp 560-568 Mar 2012; journal article

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Abstract : Transparent data on cost and quality of health care is increasingly in demand, but it is not clear how consumers interpret the data. In an online survey of 1,421 working adults, researchers presented descriptive data on physicians and hospitals together with price comparisons, varying the presentation in three ways. Respondents gave confidence ratings and perceived quality judgments. Results suggest that consumers equate higher cost with higher quality, unless high-value options are made very clear. The format and terminology used in presenting data can easily detract from consumer choice of high-value options, while highlighting high-value choices increases their selection by study respondents.
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Characteristics of Employers and Funds.
Devendorf, Lewis E.; Benefits Magazine; v49 no3 pp 30-34 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : To manage health plan costs, it is essential to gather and analyze meaningful data. Each organization's data is unique, affected differently by its workforce demographics and impact events. Large plans typically gather and analyze their own data, while smaller plans can get historical change data and benchmarking against comparable organizations from their insurance carrier. Reports can reveal trends in cost sharing, pharmacy vs. medical claims, key expense drivers, network usage and more. Predictive modeling can project future costs and drivers based on the current health risks of the employee population. While health costs continue to rise, they represent only about one-fourth of total health-related costs, including absenteeism, disability and presenteeism, making the focus on wellness and behavior change increasingly important.
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Court Affirms Denial of Benefits.
Benefits Magazine; v49 no3 pp 56-57 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Tenth Circuit Appeals Court affirmed the lower court's ruling in Eugene S. v. Horizon Blue Cross Blue Shield, which revolved around delegation of authority to make benefits decisions to a third-party administrator (TPA). The plaintiff sought coverage for residential treatment for his son but was granted only partial coverage. The plaintiff sought to block the defendant's supplemental declaration authorizing its TPA to decide claims. The district court permitted the declaration and was affirmed by the Appeals Court. The Appeals Court noted the summary plan description gave the TPA discretionary authority and found this delegation sufficiently mitigated any conflict of interest from a dual role. Using an arbitrary and capricious standard of review, the court ruled the defendant TPA's decision was reasonable and made in good faith.
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Court Assesses Appropriate Equitable Relief.
Benefits Magazine; v49 no3 pp 55, 57 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In US Airways Inc. v. McCutchen the Third Circuit Court of Appeals explored the concept of appropriate equitable relief in ERISA Section 502(a)(3). The plaintiff plan sponsor sought to recover $66,866 paid for the defendant's medical expenses after a car accident. The defendant had recovered $110,000 from a settlement with the other driver and from under insured motorist coverage, minus 40 percent in attorney fees, leaving under $66,000. The Appeals Court considered that appropriate equitable relief was not intended to mean all relief and that unjust enrichment should be avoided. It noted that the plaintiff did not participate in collecting funds for the defendant and that full reimbursement would constituting a windfall since it exceeded the amount the defendant received. The court reversed the lower court's award and remanded the case to determine an appropriate equitable relief amount.
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Court Permits Third-Party Provider to Proceed With State Law Claims Against ERISA Plan Administrator.
Benefits Magazine; v49 no3 pp 58-59 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Fifth Circuit Appeals Court reversed the major part of the lower court's decision in Access Mediquip L.L.C. v. UnitedHealthcare Insurance Co. The court ruled the plaintiff's claims of promissory estoppel, negligent misrepresentation and state breach of contract are not preempted by ERISA and allowed the claims to proceed. The plaintiff arranged and provided medical devices for health care providers on the understanding the defendant would pay all reasonable charges. The defendant's policy, however, was to deny certain claims made by nonsurgical facilities, including the plaintiff. Pointing out that the issue was not about health plan coverage but the defendant's misleading statements, the Appeals Court allowed the plaintiff to proceed with state law claims but dismissed claims for unjust enrichment and quantum merit as preempted by ERISA.
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Discount Plans Poised for Growth.
Davis, Andrea; Employee Benefit News; v26 no3 pp 20, 22 Mar 2012; journal article

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Abstract : Voluntary discount dental plans are gaining attention as an alternative to traditional dental insurance, especially as employers trim benefits and shift costs. Members have access to a network of dental service providers who offer care at a discounted rate, and they pay directly without an insurer as intermediary. Employers pick up all, some or none of the annual membership cost, about $130 in 2012. Discount dental plans are less expensive and more flexible than fully insured dental plans and are especially likely to grow as individuals bear more of their health care costs. The children's dental care provisions of the Patient Protection and Affordable Care Act may also give discount dental plans a boost by enabling differentiation between parents' and children's dental coverage.
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Earn Less, Pay Less.
Woodward, Nancy Hatch; HR Magazine; v57 no3 pp 67-68, 70 Mar 2012; journal article

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Abstract : Health insurance premiums proportionate to salary may be on the rise. Starting in 2014 the Patient Protection and Affordable Care Act requires employers to provide affordable coverage not to exceed 9.5 percent of a family's income, or face a penalty. One in ten employers with 500 or more employees takes this approach, including Pitney Bowes and General Electric. The structure accounts for wage ranges, health plans and coverage tiers and formula calculations. The arrangement does not work in all settings, such as in an organization with mostly low-wage employers, and prohibitions against discriminating in favor of highly paid employees must be taken into consideration. For many basing premium payments on wages seems only fair, but some employees, union leaders and those at higher income levels may object to a change, making communication a key part of a transition.
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Easing the Burden of Chronic Pain in the Workplace: The Role of Human Resources.
Lipnick, Jesse; Benefits Magazine; v49 no3 pp 36-39 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Unusually persistent pain leads to 19 percent of workers compensation medical costs, with pain medications being the first and third most commonly prescribed drugs for injured workers, according to NCCI Holdings. Multiple reports document the costs to insurers, employers and taxpayers. Plan sponsors rarely insist on the most cost-effective treatment, and intervention for suspected drug abuse is constrained by regulatory and privacy limitations. Intermittent urine drug testing has been proven to be cost effective by assessing adherence to drug therapy. Human resource professionals can support workers dealing with chronic pain by ensuring that appropriate medical management is available and by promoting awareness of pain management programs, including nonpharmacologic strategies.
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Emergency Measures.
Prost, Marlene; Human Resource Executive; v26 no2 pp 34-35, 37-39 Mar 2012; journal article

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Abstract : The unnecessary use of hospital emergency room (ER) visits is contributing to soaring health care costs. The Rand Corp. documented in 2010 that 16.8 percent of problems prompting ER visits could be handled at an urgent care center or retail medical clinic, saving $4.4 billion annually. It takes clear communication to convince employees that there are better choices for nonemergent health care. Rice University, seeing ER charges rise up to 40 percent, used an awareness campaign and a change in copays to encourage use of urgent care centers and primary care physicians, leading to a by 12 percent drop in ER visits in the first year. Other alternatives to nonemergent care are 24/7 nurse helplines, the growing telehealth trend involving phone or Internet consultations with a physician, and even house calls through concierge health services.
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Feds Propose Rules on New Four-Page Health Plan Summaries and Advance Notice Requirements for Plan Changes.
Holloway, Mark; Fensholt, Edward; Benefits Law Journal; v25 no1 pp 77-85 Spring 2012; journal article

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Abstract : Under the Patient Protection and Affordable Care Act, health plan sponsors must provide plan members and beneficiaries a concise summary of health benefits and coverage (SBC). The document must not exceed four double-sided pages printed in least 12-point font size and be written in a culturally and linguistically sensitive manner. Sponsors must distribute SBCs before initial enrollment, at open enrollment and within one week of an individual or special request. The proposed regulation that notification about any material plan changes must be provided at least 60 days before the change is under review as of spring 2012. The National Association of Insurance Commissioners has developed a model SBC with glossary.
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How Report Cards on Physicians, Physician Groups, and Hospitals Can Have Greater Impact on Consumer Choices.
Sinaiko, Anna D.; Eastman, Diana; Rosenthal, Meredith B.; Health Affairs; v31 no3 pp 602-611 Mar 2012; journal article

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Abstract : Part of consumer education for health choices can come from report cards on physicians, groups and hospitals, but existing reports appear to make little difference in decision making. Discussion and survey responses of attendees at the 2011 National Summit on Public Reporting for Consumers in Health Care, sponsored by the Agency for Healthcare Research and Quality, revealed consensus that weaknesses in card content, design and accessibility may be to blame. The reports may prompt care providers to improve their performance, but major concerns focused on the adequacy of quality measures, poor presentation and delivery, and marginal consumer engagement. The observed need for the development of consumer-focused measures is echoed in the mandate for performance metrics in the Patient Protection and Affordable Care Act.
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Implied Vested Rights to Health Benefits Are Not Prevented by State Law.
Benefits Magazine; v49 no3 pp 53-54 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The California Supreme Court ruled that, without specific legislative prohibition, a provision implying vested retiree health benefits may bind the county to cover those benefits. Orange County provided health insurance to active and retired employees and, for over 20 years, pooled the costs for the two groups. It resolved to split the groups in 2008, leading to higher costs for retirees, but did not negotiate the change with the retirees. The plaintiff retirees asserted the longstanding pooling practice amounted to an implied contractual right to continuation. The district court ruled for the county, but the Ninth Circuit Appeals Court turned to the state Supreme Court for clarification on state law. The Supreme Court found no statutory prohibition against implied health benefit contracts. It noted that vesting can be implied under certain circumstances but depends on the two parties' intent, a matter beyond the questions it was asked to resolve.
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IRS Issues W-2 Reporting Guidance.
Bongiovanni, Kate; Employee Benefit News; v26 no3 p 26 Mar 2012; journal article

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Abstract : Notice 2012-9, issued by the IRS in January 2012, addresses reporting on the cost of employer-provided health benefits on Form W-2, as required by the Patient Protection and Affordable Care Act. The notice makes clear that employers need not report on some kinds of coverage, including dental and vision benefits under separate policies, wellness programs, onsite clinics and employee assistance programs. Contributions to health reimbursement arrangements, health savings account and health flexible spending arrangements may be included on W-2s but are not required. The notice discusses use of the small employer exception when an agent files the W-2s as well as reporting health FSA costs when the amount exceeds the employee's deferral election. The reporting requirement takes effect with the 2012 calendar year.
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Lured by the Group Captive.
Lenckus, Dave; Risk & Insurance; v23 no2 pp 28-29 Mar 2012; journal article

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Abstract : In the continuing search for effective health benefit cost-containment strategies, larger self-funded employers are showing interest in group captive insurers. The approach has been useful for smaller and midsized organizations choosing to self fund. It smoothes cost volatility and lowers the impact of lasering after a catastrophic claim for a solo self-funder. Groups buying stop-loss coverage but holding insufficient cash reserves gain by joining forces and using a group captive, especially since the Patient Protection and Affordable Care Act eliminated lifetime and annual benefit caps. While group captives do not need DOL approval, the challenge comes in convening employers of like mind about health benefits who are willing to commit to the group for at least three years.
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Mass Overhaul.
Huff, Charlotte; Workforce Management; v91 no3 pp 32-34, 36, 38, 40 Mar 2012; journal article

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Abstract : Massachusetts led health care reform with its 2006 state law that by 2010 had expanded coverage to 98.1 percent of residents. But the cost of health care in the state continues high, leading many employers to self fund and prompting stakeholders to push for further reform. Employers and insurers are targeting the cost differences between care providers and moving toward pricing tiers, not only for drugs but also for physicians and hospitals. Employees, such as those at Boston's Beth Israel Deaconess Medical Center, are being shown actual price differences between providers and asked to choose between unlimited access to any provider for a high premium or restriction to less expensive service providers for a more modest user cost. In 2012, nearly one in five of the employees chose the limited two tiers. The state's experience with health care and insurance reform illustrates the complexity of the problem, the need to reevaluate progress and to modify the plan as necessary.
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Medical Cost Savings for Participants and Nonparticipants in Health Risk Assessments, Lifestyle Management, Disease Management, Depression Management, and Nurseline in a Large Financial Services Corporation.
Serxner, Seth; Alberti, Angela; Weinberger, Sarah; American Journal of Health Promotion; v26 no4 pp 245-252 Mar-Apr 2012; journal article

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Abstract : Nearly 50,000 employees enrolled in group health plans through a single corporation were followed over three years to assess health cost differences between those involved in a comprehensive health and productivity management program and nonparticipants. Participation was based on competing a health risk assessment or involvement with programs geared to lifestyle management for weight, nutrition, smoking, and general health promotion; disease management; or depression management; or interaction with a nurse through a telephonic health information line. Medical claims for all participants increased less than for nonparticipants. The return on investment in the second year was 3.33:1 and 2.45:1 for the three-year program. The study demonstrated the value of a multiprong approach supported by a strong corporation-wide campaign to promote health awareness.
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Misdiagnosis: The Clinical Integration Solution.
Falchuk, Evan; Employee Benefit Plan Review; v67 no3 pp 15-16 Mar 2012; journal article

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Abstract : Research estimates the rate of misdiagnosis at 20 percent or higher. This is the result of lack of integrated clinical data, time pressure, inattention to detail and provider stress, and contributes to soaring health costs, and patient confusion and suffering. The solution is clinical integration, starting with a health plan sponsor's expectation that all vendors will coordinate efforts to support employees' disease management. Covering disability, specialty pharmacy, care providers, wellness programs and disease management, clinical integration aims to make the most efficient use of existing benefit offerings. It starts with the right diagnosis, which should be checked by a second opinion or more, considering personal and family medical history. Employers should insist that employees take active part in clinical integration, being educated about the true costs of care and being responsible health care recipients.
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New Jersey Health System Sees Results With VBID.
Rahm, Janice; Employee Benefit News; v26 no3 pp 14-15 Mar 2012; journal article

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Abstract : Employees of New Jersey's JFK Health System have a choice of health plans, but the 40 percent who selected the value-based insurance design (VBID) option are enjoying premium increases under one percent and a fifth year of no increases in deductible or copays. The health system worked with SeeChange Health Solutions to design an option that used rewards and incentives to steer members toward positive health choices. The result has been engagement with the wellness program and near doubling of screenings for breast and colon cancer. With a VBID approach, employers can design incentives to promote following treatment plans and using preventive services as well as focus on specific conditions. The objective is to simplify access to high-value services and use health care dollars in the most effective way.
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Small Shops Ready to Roll Out More Variety.
Beyer, Lisa; Workforce Management; v91 no3 pp 3-4 Mar 2012; journal article

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Abstract : A November 2011 survey of small business owners by HealthPass New York revealed strong support for state health exchanges. Eighty-four percent saw them as a good idea, 76 percent will consider using them and 60 percent who do not offer health coverage are more likely to do so through an exchange. Small business owners need plan options and simple administration. Over half report spending too much time scouting plans, the majority prefer a small business exchange in the private sector, and 45 percent want an online purchasing option. The state exchanges are seen as a good opportunity for companies with under 50 full-time workers, though the situation may be complicated for those with workers in multiple states. Business owners know health benefits are important for attracting and retaining workers, but they are looking for guidance to help plan for health reform law compliance.
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