The Downside of Narrow Networks and High Deductibles

HEALTHCARE
The Downside of Narrow Networks and High Deductibles
Seven in 10 emergency physicians are seeing patients with health insurance who have delayed medical care because of high out-of-pocket expenses, high deductibles, or high co-insurance, according to a survey by The American College of Emergency Physicians.

Also 73% are seeing more Medicaid patients who delayed medical care because their health plan didn’t have enough primary care physicians (narrow networks). Sixty-seven percent of emergency physicians say that primary care physicians are sending patients to emergency departments to get medical tests or procedures because their health plan refused to cover an office visit.

Sixty-percent of emergency physicians say that they’ve had a hard time referring their patients to specialists because of narrow network plans. More than 80% have treated patients who had difficulty finding specialists because their health plans have narrow networks. Sixty-five percent are seeing more patients in the emergency department due, in large part, to the fact that health insurance companies don’t have enough primary care physicians. Seventy-three percent are seeing more Medicaid patients because insurance companies don’t have enough primary care or specialty physicians.

Jay Kaplan, MD, FACEP, president of ACEP said, “Health insurance companies are shrinking the number of doctors available in their networks, making it more likely that patients will be forced into out-of-network situations…Balance billing would not even exist if health plans paid what is known as ‘usual and customary’ payment in the insurance industry — what is also known as ‘fair payment.’ Emergency patients are especially vulnerable because health plans know that emergency departments never turn anyone away. Health insurers have been taking gross advantage of patients and medical providers since the Affordable Care Act (ACA) took effect, arbitrarily slashing reimbursements to physicians by as much as 70%. Patients and physicians should band together to fight these dangerous insurance industry practices.” Dr. Kaplan also questioned why four of the largest insurance companies had the resources to merge, given the ACA requires insurers to spend at least 80% of premium revenue on medical care. For more information, visit acep.org.

Healthcare Providers Are Losing Confidence in the ACA
Healthcare providers are losing confidence that the ACA can deliver its key objective: to provide affordable healthcare. But they say that the ACA will have beneficial effects in other aspects of health care. Only a third of the providers say that the ACA will lower the per-patient cost of healthcare, down from two-thirds last year, according to the 2015 Mortenson Healthcare Industry Study. Nearly 80% say the ACA needs significant revisions.

A majority of providers say that several ACA provisions can improve patient outcomes, such as those relating to facility design, information technology, waste and energy reduction, and environmental improvements. Many providers are confident that transparency and wellness initiatives will lead to better healthcare. They say that the ACA will improve care by making providers rethink how they provide services. Nearly 70% say the ACA will shift reimbursements from fee-for-service to quality of outcomes, which would be a dramatic change for the healthcare industry. For more information, visit mortenson.com.

Guide to Understanding the Cadillac Tax
A white paper by Benefitfocus explains how the Cadillac tax will be imposed. The tax goes into effect January 2018. It also explains what employers can do now to mitigate exposure to the tax. The white paper titled, “Don’t Get Run Over by the Cadillac Tax,” is authored by Christopher Condeluci, ACA specialist and employee benefit attorney. He participated in developing portions of the ACA, including the Cadillac tax. For more information, visit benefitfocus.com.

AIDs Group Slams Outrageous Drug Prices
The AIDS Healthcare Foundation (AHF) says that a lack of regulation and greed are to blame for soaring specialty drug prices. Drug companies have increasingly introduced specialty medications at astronomical prices including Gilead’s $1,000-per-pill Sovaldi or $94,500 cost of Harvoni. Turing Pharmaceuticals CEO Martin Shkreli made headlines when his company raised the price of Daraprim over 5,000% after acquiring the rights to the drug. AHF president Michael Weinstein said, “The one upside of Martin Shkreli’s price hike is that it unleashed a firestorm of criticism…over the pharmaceutical industry’s greed on drug pricing that has been festering for years. Turing’s…CEO’s greed is likely to go down in history as the straw that broke the camel’s back on drug pricing.”

Turing purchased the 62-year-old Daraprim in August from Impax Laboratories for $55 million. The medication is used to treat toxoplasmosis in AIDS patients. Overnight, the company priced the drug at $750 per pill until widespread public outrage prompted Shkreli to announce a yet-to-be-determined price reduction.
Daraprim used to be available through the federal government’s 340B drug discount program at $1 per 100 tablets—one penny per pill. The vast gap between the price that government agencies were allowed to pay for Daraprim compared to cost charged to private insurers underscores the need for increased government oversight and regulation of drug company pricing, according to the AHF.

Presidential candidate Hillary Clinton vowed to release a plan to reform the specialty drug market, declaring on Twitter that she wants to put an end to profiteering. Weinstein said, “We call upon the other candidates…to detail how they would show leadership in addressing the issue of drug costs that the majority of Americans consider to be a top concern.” AHF is sponsoring two state ballot initiatives in California and Ohio to give the states increased bargaining power to get lower drug prices. For more information, visit facebook.com/aidshealth.

Consumers Like Their Med Advantage Plans
Nearly half of Medicare Advantage members agree strongly that their health plan is a trusted partner in their health and wellness, according to a J.D. Power survey. Sixty-four percent say they have enough coverage for the care they need. Rick Johnson, director of the Healthcare Practice at J.D. Power said, “Medicare Advantage health plan members tend to have a more favorable image of their health plan than do members of commercial plans on brand measures of trustworthiness, affordability, reputation, and customer-centricity. Members pay more to move from Medicare to Medicare Advantage. The plans and the government do an excellent job demonstrating the value of the Medicare Advantage plan. Members say the money spent is worth it.”

One of the key benefits Medicare Advantage plans offer is the choice of primary care doctors, specialty doctors, and hospitals. Seventy-three percent of members say their doctors have not been dropped from their plan’s network during the past year, and 74% say that their hospitals have not been dropped. For more information, visit jdpower.com.

EMPLOYEE BENEFITS
The Top Regulatory Issues for Employers
According to Paychex, these are the top regulatory issues for employers:

U.S. Supreme Court Ruling on the Affordable Care Act
In late June, the Supreme Court ruled that eligible individuals who purchase health insurance through the federal marketplace will continue to qualify for premium tax credits. Applicable large employers (ALE) will have to file Forms 1094-C and 1095-C with the IRS. ALEs must track and report the following to the IRS beginning with this tax year: full-time employee status, offers of health coverage, and the affordability and adequacy of coverage offered to full-time employees.The ACA defines a full-time employee as one who works 30 or more hours a week on average. Employers may be subject to penalties for not offering affordable and adequate health insurance to full-time employees and their dependents.
U.S. Supreme Court Ruling on Same-Sex Marriage
On June 26, the Supreme Court ruled that spousal benefits, mandated by federal law, must be extended to same-sex marriages. An employer that provides benefits, such as health insurance, to opposite-sex spouses, may be obliged to treat same-sex spouses in a similar manner. Employers should review plan documents and benefit offerings to ensure they reflect the change in law.
Proposed Expansion of Overtime Rules
In early July, the Dept. of Labor (DOL) released a proposed rule that would make millions more white-collar workers eligible for overtime. The Fair Labor Standards Act requires employers to pay overtime to employees who work more than 40 hours in a workweek. But workers who make $455 a week ($23,660 a year) are exempt from overtime protections. Under the proposed rule, the minimum salary level for an exempt employee would jump to $970 a week ($50,440 annually). In preparation for the new rule, many businesses are reevaluating how they staff and operate their businesses. Their top considerations are adjusting worker classifications, evaluating wages, reviewing similar state laws, and tracking employee hours.
Mandatory Sick Leave
Certain private employers are or will be required to offer sick leave due to recently passed legislation, ballot initiatives, and local ordinances. All of the activity about mandatory paid (and sometimes unpaid) sick leave has occurred at the state and local levels. There are no federal regulations or guidelines requiring private employers to provide paid sick leave, although certain employers must provide unpaid leave under the Family and Medical Leave Act for qualifying reasons. Only the District of Columbia and four states have sick leave laws on the books (California, Connecticut, Massachusetts and Oregon). But more than 20 local jurisdictions have passed ordinances, and the movement is expected to continue to grow. Business owners should expect additional changes related to mandatory sick leave. Complying with the latest sick leave laws and regulations may also include detailed notice, posting, and recordkeeping requirements.
Minimum Wage
The federal minimum wage rate remains $7.25 per hour. However,many states and local jurisdictions have increased their own minimum wage rates due to Congressional inaction on this issue. In 2015, 22 states increased their minimum wage rates. Business owners need to pay close attention action on the state and local levels to remain compliant with the applicable minimum wage laws.
Increased Enforcement of Employee Classification
Editor’s note: Most of the text under this subhead is our summary of DOL documents, and is not from Paychex. The Department of Labor (DOL) issued an Administrator’s Interpretation (http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.pdf) to clarify whether a worker should be considered an employee or contractor under the Fair Labor Standards Act (FSLA). The concluding paragraph of the administrator’s interpretation says, “Most workers are employees under the FLSA’s broad definitions.”To determine whether a worker is an employee or an independent contractor under the FLSA, courts use the “economic realities” test. This test involves several factors to determine whether a worker is economically dependent on their employer. The DOL says that the very broad definition of employment under the FLSA must be considered when applying the economic realities factors. The DOL stresses that it is important to not just focus on not just one or two factors, but to look at several factors to answer the ultimate question of economic dependence.

On its website, The DOL says, “Misclassification of employees as independent contractors presents one of the most serious problems facing affected workers, employers and the entire economy. Misclassified employees often are denied access to critical benefits and protections to which they are entitled, such as the minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. Employee misclassification generates substantial losses to the federal government and state governments in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds. It hurts taxpayers and undermines the economy.”

Paychex says that employers should review the administrator’s interpretation and be careful when classifying workers as independent contractors. It is not yet known how the DOL will apply this guidance to individual employers. To download a SlideShare of the Top Regulatory Issues of Summer 2015, visit slideshare.net.

Study Quantifies the Value 403(b) Advisors
Participants in 403(b) plans reap financial benefits from working with an advisor, according to a study by AXA US. Those who used an advisor had a 34% higher median balance in their accounts than did those who did not. Those using an advisor were extremely or very satisfied with the performance of their 403(b) plans. The study also reveals the following about participants:

Those who worked with an advisor had 33% higher average monthly contribution levels.
65% of participants using an advisor invested in two or more funds versus 55% of those who chose not to use an advisor.
Two-thirds attributed earlier enrollment in retirement plans to their advisor’s influence.
80%, those who used an advisor kept an eye on their account’s performance versus 70% of those who didn’t use an advisor.
86% of participants also said that an advisor helped them to set and stick to their retirement savings goals.

For more information, visit axa.com.

Millennials Are Less Likely to be Enrolled in ID Theft Protection Services
With a new identity fraud victim every two seconds, there is significant risk to consumers. This was evident in the fact that consumers spent more than $1 billion on identity protections subscriptions last year, according to Javelin Strategy & Research. The following is a snapshot of ID theft subscribers:

Most subscribers are male, revealing a need to tailor marketing and education to women.
Most live in Texas and California.
Mortgage fraud is the most difficult type of fraud to resolve, taking 27.5 hours while utility fraud takes the least amount of time to resolve, taking four hours.

For more information, visit facebook.com/CSID and on Twitter at @CSIdentity.

IN CALIFORNIA
EPIC Named a Fastest-Growing Private Company in San Francisco
EPIC Insurance Brokers and Consultants has been ranked 66th on San Francisco Business Times 2015 list of 100 fastest-growing private companies in the Bay Area. EPIC was one of only two Bay Area-based insurance brokers to be recognized. EPIC generated three-year growth of 106%, pushing total 2014-year end revenue to 125.7 million. Complete results of the Fast 100 awards can be found here: bizjournals.com.

Anthem Offers New Medicare Advantage Plans
Anthem Blue Cross has expanded dual-eligible special needs plans (DSNPs) for people eligible for both Medicare and Medi-Cal. Anthem has also expanded traditional HMOs for the general population. Anthem introduced provider collaboration plans in all Anthem Medicare Advantage Prescription Drug (MAPD) plan service areas. Anthem MAPD plans continue to offer significant benefits that are not available in Original Medicare, including $0 copays for preventive dental, vision and hearing benefits, $0 copays for online doctor’s visits and a free fitness program.

Anthem offers MAPD plans in Fresno, Kern, Los Angeles, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Francisco, Ventura and Yolo counties. Plans are effective Jan. 1, 2016.
Anthem is launching a $0 premium HMO product in San Bernardino and Riverside counties called “Anthem MediBlue Select (HMO)” featuring closer alliances with high-quality, local health care providers to coordinate care, as well as lower copays and out-of-pocket costs. This product, which already exists in Los Angeles and Orange counties, features $0 copays for primary care doctor visits, specialist visits and hospitalizations, plus transportation to doctor’s appointments.

Anthem is expanding its $0 premium dual-eligible special needs plan (DSNP) called “Anthem MediBlue Dual Advantage (HMO SNP)” to Sacramento County to serve beneficiaries eligible for both Medicare and Medi-Cal. These plans coordinate the separate programs while providing enhanced benefits. Like existing Anthem special needs plans in Fresno, Kern, San Francisco, and Ventura counties, this plan is available for a $0 premium and includes dental, vision and hearing benefits, an allowance for eyewear and hearing aids, transportation to doctor’s appointments and a free fitness program, at no extra cost to the member. Unlike most plans, people who qualify for a DSNP have a continuous special election period, which means they can elect to join a new plan at any time throughout the year.

A traditional HMO, called “Anthem MediBlue Plus,” is being launched in Sacramento, Yolo, and San Diego counties. An HMO plan called “Anthem MediBlue Coordination Plus” is being introduced in Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties. It emphasizes care coordination with attractive supplemental benefits. Although the Coordination Plus plan is open to all Medicare beneficiaries, it may be an especially good fit for people who qualify for both Medicare and Medi-Cal. In fact, the premium is $0 for those people who are eligible for both.

To improve member health and lower member costs, Anthem continues to implement provider collaboration agreements. More than 20 new agreements have been implemented across the state. As a result, all of Anthem’s California HMO members now have access to a provider collaboration agreement.
LiveHealth Online (LHO) telehealth is being added to all Anthem HMOs in California. LHO allows members to access board-certified doctors through their computer or mobile device, and will include a behavioral health benefit effective Jan. 1, 2016. With this additional benefit, members can generally choose a qualified mental health expert and schedule a counseling session. Both doctor and counseling visits are available for a $0 copay to eligible members.

Anthem is enhancing its Medicare pharmacy benefits in 2016. Prescription Drug Plans (PDP) and MAPD plans will feature a select tier with selected generic drugs available for a $0 copay at preferred pharmacies, including some drugs that treat high blood pressure, high cholesterol, and diabetes. All Anthem MAPD plans and several Anthem PDPs will offer certain generics in the coverage gap for a $0 copay.
As part of its initiative of being easier to do business with, Anthem has introduced a standard nomenclature nationwide to its individual MAPD plans. This includes Anthem MediBlue Dual Advantage (HMO SNP) for DSNPs, Anthem MediBlue Plus (HMO) for HMOs, Anthem MediBlue Access (PPO) for PPOs, Anthem MediBlue Coordination Plus (HMO) for the new coordination plan and Anthem MediBlue Select (HMO) for select plans.

In addition to MAPD plans, Anthem offers Medicare supplement plans and standalone PDP plans across all California counties. Medicare supplement plans help cover costs Original Medicare doesn’t, such as copayments, coinsurance and deductibles. These plans offer access to any doctor or medical facility that accepts Medicare, generally for a higher premium than an MAPD. California residents are also eligible to get a $180 discount under certain circumstances for the first year they are enrolled in an Anthem Blue Cross Medicare Supplement. Medicare Supplement plans are generally paired with a PDP. For more information, visit anthem.com.

UnitedHealth Settles Out-Of-Network Surgery Center Class Action
United has agreed to a total settlement fund of $9.5 million in order to settle a case involving underpayments to ambulatory surgery centers (ASCs). ASCs provide outpatient surgical procedures, such as orthopedic surgery, podiatry, endoscopy, and ophthalmology. Hooper, Lundy and Bookman, PC filed a motion to settle a class action complaint it filed more than six years ago against United Healthcare Services and OptumInsight.
When ASCs are out-of-network with an insurer, they are commonly entitled to be paid based on a reasonable and customary amount. This case challenged the defendants’ calculations of those reasonable and customary amounts under employer-provided healthcare benefit plans and health insurance policies that are governed by ERISA. The complaint alleges that United and OptumInsight improperly calculated the reasonable and customary amounts for these out-of-network ASCs. They say that this miscalculation resulted in underpayments in the millions of dollars.

The parties estimate that approximately 250 centers could qualify to participate in the settlement. If the court approves the settlement, all potential class members will get instructions on how to participate in the settlement process.

FINANCIAL PLANNING
Income Distribution Planning Is Top Client Goal
Sixty-five percent of financial professionals say that the biggest goal for clients in their 50s and 60s is retirement income distribution planning, according to a survey by Saybrus Partners. Only 27% recommend fixed and/or indexed annuities most often for clients in this age group. Mark Fitzgerald, national sales manager for Saybrus Partners said, “Financial professionals may not be recommending annuities as often as they could for pre-retirees…By educating themselves about ’s fixed and indexed annuities, which are continuing to evolve in their features and benefits, they can provide their clients with a full range of options.” Financial professionals’ recommend the following products most often:

60% mutual funds and advisory services/actively managed funds
54% managed accounts.
35% variable annuities.
15% life insurance.

Fitzgerald said, “A client’s portfolio is most vulnerable in the years just before and after retirement. Losses, especially in the first few years, combined with withdrawals can significantly impact a client portfolio’s sustainability. As such, financial professionals can take this opportunity to ensure these clients are adequately adjusting their portfolio from an asset accumulation strategy to retirement income distribution planning and are using a combination of products and services that both protect against market volatility and insure guaranteed lifetime income for their clients in retirement.”

When the financial professionals were asked what clients in their 50s and 60s consider to be the biggest risk to their retirement portfolios, 58% mentioned outliving their savings; 17% mentioned a major health crisis; 16% mentioned market volatility; and 6% mentioned taxes. Saybrus Partners is a subsidiary of The Phoenix Companies. For more information, visit phoenixwm.com.

NEW PRODUCTS
Stop-Loss Benchmark
Sun Life Financial is giving employers customized demographic and financial information to help them choose self-insurance and stop-loss coverage options. For more information, visit http://bit.ly/pr10-stoplossbenchmark.

Deferred Income Annuity
Principal Financial Group introduced a deferred income annuity as an option in a defined contribution plan. It allows pre-retirees to purchase guaranteed income ahead of time. Principal Pension Builder lets participants direct a portion of their contributions into a deferred income annuity. They can transfer part of their retirement plan account balance to purchase guaranteed income or direct a portion of contributions toward purchasing guaranteed income. For more information, visit principal.com.

Combined Insurance Continues to Grow Latino Markets
Combined Insurance continues to grow its Latino initiative by continuing to hire bilingual sales agents and staff. The company provides individual supplemental accident, disability, health, and life insurance products. Earlier this year, it launched a Spanish new agent development program for sales agents who serve customers in Texas, California, Florida, and New York. Since the Latino initiative launched, Combined Insurance has hired more than 450 bilingual sales agents. For more information, visit combinedinsurance.com.

Life Settlements with Retained Life Benefits
The Lifeline Program announced plans to provide new liquidity solutions for consumers by purchasing a portion of their life insurance policies. By selling only a portion of a policy. Beneficiaries retain a percentage of the policy death benefit without any future premium obligation. The Lifeline Program is actively acquiring life insurance policies with face values ranging from $1 million to $20 million as well as life settlement portfolios from the tertiary market.

In New York and California, regulations require companies to pay the policy beneficiary the contracted death benefit if the policy lapses, intentionally or by mistake. Scott Page, president and CEO of the Lifeline Program said, “We applaud insurance regulators in New York and California for adding these important consumer protections for retained life benefit transactions.”

“We are bullish about life settlements and retained death benefit contracts. Our long-haul, buy-and-hold strategy positions our company as the best solution for seniors and wealth managers who are exploring life settlement options,” he said. For more information, visit thelifeline.com.