Fight to Slash Drug Prices Headed for 2016 California Ballot

December 23, 2015 California Broker Magazine

IN CALIFORNIA

SlashedPricesFight to Slash Drug Prices Headed for 2016 California Ballot
The AIDs Healthcare Foundation has collected enough California voter signatures to qualify for the November 2016 ballot. If the ballot initiative passes, state programs cannot pay more for prescription medications than the prices negotiated by the Dept. of Veterans Affairs. The Foundation has a similar ballot drive in Ohio.

“V.A. pricing is, by far, the lowest pricing available to any government agency for the purchase of prescription drugs for use in state programs…If California and Ohio are able to pay the same prices for prescription drugs as the amounts paid by the Dept. of Veterans Affairs, it would result in significant savings to taxpayers. These ballot initiatives are necessary and appropriate to address public concern about runaway drug pricing,” said Michael Weinstein, president of AIDS Healthcare Foundation.

“Nationally, prescription drug spending increased more than 800% between 1990 and 2013, making this one of the fastest-growing segments of health care. Spending on specialty medications, such as those used to treat HIV/AIDS, Hepatitis C, and cancers, are rising faster than other types of medications. Total spending on specialty medications increased more than 23% in 2014 alone,” said Tracy Jones, executive director of the AIDS Taskforce of Greater Cleveland.

Pharmaceutical Research and Manufacturers of America (PhRMA) has established a fund of more than $10 million to fight the California Drug Price Relief Act. Johnson & Johnson is the largest contributor, with $5.86 million donated to date. These drug makers also contributed millions of dollars to oppose the measure: Amgen ($4.265 million), AstraZeneca Pharmaceuticals LP ($4.15 million), AbbVie Inc. ($4.15 million), (Novartis ($2.88 million), Eli Lily ($2.88 million), Bristol-Myers Squibb Co. ($2.88 million), Otsuka America ($1.075 million), and Purdue Pharma LP ($1.105 million)

The Foundation is fighting back at the Johnson & Johnson’s headquarters starting his week in New Brunswick, N.J. by driving trucks near the headquarters with mobile billboards that say, “No More Tears for Greed.” The Foundation resorted to using trucks when an outdoor advertising company refused to run paid billboards from the Foundation. The ads will also appear in nearby transit stations. In addition, street teams have begun distributing palm cards near the Johnson & Johnson campus. For more information, visit www.aidshealth.org.

State Reaches Settlement in Pharma Pay-for-Play Scheme
The California Dept. of Insurance and whistleblowers reached a $23.2 million settlement with pharmaceutical company, Warner Chilcott. Three former employees said that Warner Chilcott paid kickbacks to doctors and falsified prior authorization forms to increase the number of prescriptions for several medications. Whistleblowers alleged that Warner Chilcott used illegal kickbacks to influence treatment decisions. They said that the company often hosted events at high-end hotels and spas with little or no educational content in order to encourage physicians to write more prescriptions for Warner Chilcott medications.

As part of the settlement, Warner Chilcott will refrain from promoting its pharmaceutical products identified in the complaint and sold in California. Of the $23.2 million state settlement, California will get $11.8 million, which is to be used for enhanced insurance fraud investigation and prevention efforts.

Scott Simmer, the whistleblowers’ lead counsel said, “The federal False Claims Act allows whistleblowers to sue for fraud related to government health plans, but only California and Illinois have statutes that allow whistleblowers to bring claims alleging illegal kickbacks to health care providers for the purpose of defrauding private health insurance plans.” In California, private citizens can sue and get a share of the recovery. The whistleblower’s share of a federal recovery in a non-intervened case is 25% to 30%.

“This case really should get the attention of state insurance commissioners around the country. To put things in perspective, the federal False Claims settlement returned a net of around $2.3 million to California’s Medicaid program, but this settlement will bring in a net of $11.8 million to the state’s general fund. Most importantly, drug companies have received a clear message not to engage in drug marketing fraud in the state of California,” he said.

A separate lawsuit was filed in federal court in Massachusetts alleging that Warner Chilcott violated the Federal False Claims Act. Also, the Dept. of Justice announced a settlement of the federal allegations on October 29, in which Warner Chilcott pleaded guilty to healthcare fraud and agreed to pay $125 million to resolve federal civil and criminal liability for alleged activities that violated the federal anti-kickback and HIPAA statutes, and for false claims submitted to Medicare and Medicaid.

Multi-Million Dollar Death Master Settlements Reached
Insurance Commissioner Dave Jones announced multi-million dollar settlement agreements with Jackson National and Axa related to the Social Security Administration’s Death Master File database. Created by the Social Security Administration, the database provides insurers with the names of deceased people with Social Security numbers. Until recently, most insurers only used the database to identify deceased annuity holders in order to stop making annuity payments, not to identify deceased policyholders in order to pay life insurance benefits

To date, 22 life insurers have agreed to reforms in using the Death Master database to search for deceased policyholders and make payments to their beneficiaries. Now, life insurers representing over 73% of the market have agreed to reform their practices and search for deceased policyholders in order to pay benefits to their beneficiaries. Under the settlement, Jackson National will pay $2.5 million and Axa $3.28 million to the states participating in the national investigation. Insurers agreed to reform their business practices and use the database to search for policyholder beneficiaries that might be owed benefits from a life insurance policy.

A national investigation by state insurance commissioners led to life insurers returning more than $1 billion to beneficiaries nationwide. In addition to the investigation, the National Association of Insurance Commissioners is drafting a model law that would require all life insurers to use the Death Master File database to identify deceased policyholders in order to facilitate payment of benefits to their beneficiaries. Jackson National and Axa have agreed to compare all company records against the Death Master database to determine whether there are unclaimed death benefits and conduct a thorough search for beneficiaries to whom unclaimed benefits may be owed.

Public Meeting on Aetna’s Acquisition of Humana
The Dept. of Managed Health Care (DMHC) is holding a public meeting on Aetna’s acquisition of Humana. Representatives from the plans will be present. The meeting will be held in Sacramento on January 4 from 1:30 p.m. to 3:30 p.m. The purpose of the meeting is to discuss DMHC’s jurisdiction and authority to oversee the transaction and to solicit public comment for DMHC’s consideration as it reviews the transaction. Comments may also be submitted in writing to publiccomments@dmhc.ca.gov until 5:00 p.m. on Friday, January 8, 2016. For the agenda, visit: https://www.dmhc.ca.gov/Portals/0/AbouttheDMHC/pmA010415.pdf

Nine Southern Californians Arrested Workers Comp Scheme
Detectives with the California Dept. of Insurance arrested nine people who defrauded workers’ compensation insurers and self-insured employers. Siblings Francisco Javier Gomez, Jr., 32, and Angela Rehmann, 38, owners of G&G Interpreting Services, allegedly fraudulently billed more than $24.6 million for interpreting services for injured workers with Latino surnames.

G&G Interpreting allegedly billed for translation services to clinics where the majority of the clinic staff spoke Spanish and there was no need for translation services. In other cases, the company billed for services to clinics where 13 treating physicians spoke fluent Spanish-and again-there was no need for translation. The hours billed for interpretation services exceeded clinics’ hours, in many cases. The company billed insurers more than $422,000 for an interpreter who was in jail during the time she was supposedly providing interpreting services.

HEALTHCARE

Millennials Are Less Interested in Workplace Benefits
Today’s youngest workers are less interested and knowledgeable about their benefits, and prefer life insurance over health insurance, according to a study by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. (Millennials were born 1982 to 2002; Baby-Boomers were born from 1946 to 1965; and Generation Xers were born from 1966 to 1976). The study reveals the following about Millennials when compared to GenXers and Baby Boomers:

  • Millennials are less likely to say that health insurance is the most important benefit.
  • Millennials are more likely to say that life insurance and paid-time-off are the most important benefits.
  • Millennials are less likely to say that benefits are extremely important in their decision to accept or reject a job.
  • Millennials are more likely to be open to non-traditional ways of obtaining benefits.
  • Millennials are more likely to say they don’t know about their benefits.
  • Millennials have lower participation in various employee benefit programs.

For more information, visit www.ebri.org.

 

The Cadillac Tax Gets Delayed Until 2018
Congress passed a $1.5 trillion omnibus spending bill and $680 billion tax-extenders package, which funds the government through September 2016. President Obama signed the legislation on Friday. Included in the bill is a provision that will delay the Cadillac tax. The Affordable Care Act (ACA) imposes a 40% non-deductible excise tax on health plans with values exceeding $10,200 in coverage for singles and $27,500 for families beginning in 2018. The provision is indexed to inflation and will rise automatically over time, potentially affecting all employer-sponsored plans. If the tax goes into effect, employers could shift the cost of the tax to employees by raising deductibles and increasing other out-of-pocket costs. The omnibus bill delays the tax for two years, until 2020.

Sen. Sherrod Brown (D-OH) said, “A delay of the Cadillac tax is welcome relief for middle-class workers who shouldn’t be stuck with higher out-of-pocket costs or lower quality health care. Brown sponsored the American Worker Health Care Tax Relief Act of 2015, which would repeal the tax. The bill demands that repeal is accompanied by a proposal to offset lost tax revenue to prevent an increase in the federal deficit and protect the integrity of the health law. He added, “While I plan to continue working with my colleagues toward a full repeal of this tax, a two-year delay of the implementation date of this harmful tax will temporarily ensure that the cost of care isn’t shifted to workers in the short term.”

Terry O’Sullivan, general president of the Laborers’ International Union of North America (LIUNA) said, “LIUNA is just one of many labor, employer, health policy, and other groups opposed to this indefensible, misguided, and regressive 40% middle-class excise tax. Congressional action, while not the hoped-for outright repeal, is a big step in the right direction, and signals a recognition that the tax is deeply flawed. We hope that in the additional two years provided by this delay, Congress and the next President will, once and for all, repeal the deceptively named ‘Cadillac Tax.’”

THE INTEREST RATE FALL OUT

Rising Interest Rates Are Good for the LTC Industry
The decision by the Federal Reserve to raise short-term interest rates will spell good news for the long-term care insurance industry, states Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI). Higher interest rates will enable insurers to avoid increasing premium rates with new policy offerings. According to AALTCI data, a 1% increase in long-term interest rates can translate into a 10% to 15% decline in policy premiums. Companies offering LTC insurance policies will earn more money on the reserves they set aside to pay future claims. Slome says that the rise in interest rates may also encourage insurers to re-enter the marketplace. Slome said that higher interest rates will benefit safe investments and insurance products like long-term care insurance.

One-year CD rates were roughly 5% in 2000 and in the 4% range before the Great Recession in 2007. Interest rates have been at historic lows since then, which has affected savings accounts, CDs, annuities, life insurance, and long-term care insurance products, he explained. For more information, visit www.aaltci.org.

Life Insurers to Benefit from Rate Hikes
Gradually rising interest rates provide significant benefits for all major life insurance and annuity products, improving reinvestment rates, interest margins and reserve adequacy, says Fitch Ratings. Life insurers would benefit if a rise in short-term rates leads to a rise in long-term rates over the coming year. But they must manage certain risk factors. Rising interest rates could increase liquidity stresses. There could also be an uncertain statutory capital effect associated with variable annuities. (Statutory capital is the amount of capital and/or surplus that an insurance company must have to be licensed to do business).

Also, if interest rates rise too fast, policyholders may surrender policies faster than expected, which could lead to cash flow obligations that exceed investment returns. Fitch expects the life insurance industry outlook to shift to negative if longer term rates decline to levels seen in late 2012 (i.e. 10-year Treasury below 1.75%) and stay low beyond 2016.

Insurers Hope That the Fed’s Move Is a Sign of Things to Come
A.M. Best says that the 0.25% increase in the Federal Funds Rate will have no immediate effect on the property/casualty, life or health insurance industries, or any individual rating units. However, a continued measured rise in rates would be positive for the life/annuity industry as product spreads improve and investment portfolio yields increase. Also, rising interest rates would help carriers with underfunded pension plans. In the short-term, the Fed’s rate hike doesn’t affect insurers with predominantly longer-term bond holdings. This initial move also doesn’t ease the pain for older spread-based products with higher guaranteed crediting rates. While the insurance industry has been juggling falling portfolio yields and limited reinvestment opportunities, life/annuity companies have also been facing spread compression. For more information, visit http://www3.ambest.com/bestweek/purchase.asp?record_code=244748.

EMPLOYEE BENEFITS

The “Scariest” Workplace Challenges for 2016
The following are XpertHR’s top 10 scariest challenges employers will face in 2016. These challenges are numbered by how likely they are to affect employers:

1. Same-Sex Marriage: The Supreme Court ruled that same-sex married couples are entitled to the same rights and benefits as opposite-sex married couples nationwide.

2. Expanded protections for lesbian, gay, bisexual and transgender (LGBT) people: Federal, state, and local developments continue to expand the workplace rights of LGBT people. Employers should make sure workplace policies and practices are compliant.

3. Reasonable accommodations for an increasingly diverse workplace: As workplaces become more inclusive, employers must ensure that policies and practices are legally compliant and provide reasonable accommodations based on pregnancy, religion, disability, and sexual orientation.

4. Paid sick leave: In addition to President Obama’s executive order providing paid sick leave for federal contractors, paid sick leave laws continue to be passed on the state and local levels. Employers should determine whether any of the new laws apply and ascertain whether the leave the employer is required to provide is paid or unpaid.

5. National Labor Relations Board (NLRB) pursuit of workplace policies: With the National Labor Relations Board’s (NLRB) having a say on employer rule cases, an employer should make sure that employee handbooks don’t infringe upon employees’ rights to engage in protected collective action to improve their wages, hours, and working conditions. Workplace policies on social media, confidentiality, investigations, and communications should avoid overly broad and ambiguous language that interferes with employee rights.

6. Workplace wearables: There are risks to wearables, including employee access of inappropriate information, harassment and invasion of privacy issues, and viruses or malware being introduced into the employer’s private and secure network. Employers should outline the proper use of wearable technology in the workplace.

7. Who is entitled to overtime and raising the minimum wage: If the Dept. of Labor’s proposed regulations are made final, they would greatly increase the number of employees who are eligible for overtime.

8. Increased workplace rights for independent contractors: Employers should assess all independent contractor relationships and review the measures in place to reduce the risk of misclassification.

9. A revision of the joint employer standard and expanding the pool of employers: Employers should review business relationships and contracts to assess whether they have the right to control the terms and conditions of a contracted employee or of another business’ employee.

10. Telecommuting and flexible work arrangements: Approximately 30% to 45% of the U.S. workforce telecommutes on some basis. Employers who go this route should set clear guidelines on telecommuting and flexible working arrangements.

Honorable mention: health care reform: Applicable large employers must report the terms and conditions of the health care coverage they provide or they could be liable for a total penalty of $3 million in a calendar year.

For more information, visit XpertHR.

These Top Issues Will Affect the Workplace In 2016

Replicon outlined the top issues it believes will affect the workplace in 2016 based on observations and discussions with its partners and customers:

  1. Regulations will affect an increasingly diversified workforce: The minimum wage debate and discussions about wage and hour obligations will continue next year. There will be ongoing developments in independent contractor classification, exemption regulations, and other wage and hour rules. Businesses that hire “on-demand” companies with a significant number of independent contractors must assess how they classify their workers to avoid the kind of costly class-action lawsuits that have been popping up.
  1. Employers tread a fine line between a flexible work culture and compliance: Many companies have initiated unlimited vacation policies. Unfortunately, people don’t always take time off from work. A number of recent legal cases have exposed businesses to costly and potentially brand-damaging consequences. In 2016, companies will be more judicious in how to encourage work/life balance and implement employee benefit programs against corporate, financial, legal and human resources implications.
  1. Smart devices and the Internet of Things: Expect a continued bring-your-own-device trend in the workplace. Vendors will capitalize on the popularity of wearables to build software that supports how people work. This enterprise technology will be integrated with the “Internet of things,” to automate processes and capture data to increase workforce efficiency.
  1. Time clocks will become obsolete: Workers still use time clocks in manufacturing and retail. But these devices will become obsolete as companies migrate to the cloud. Employers will use flexible, application-based tools with videos and real-time data to prevent co-workers from punching in for other workers.

Companies incorporate more agile project management processes: Many IT departments are establishing an agile environment to release software more rapidly and reliably. This strategy requires constant collaboration among teams. Throughout the project lifecycle, there will be central access to real-time information to track critical hours and resources and keep projects on-time and on-budget. The benefits of this approach will extend across the entire company in larger product-centric and project-oriented businesses. For more information, visit replicon.com.

Guardian to Acquire Leading Government Benefit Provider

Guardian Life has entered into an agreement to acquire Avēsis. The company is one of the leading administrators for vision, dental and hearing benefits for government and commercial programs. It has three million members administered under Medicaid, CHIP, and Medicare Advantage programs; and 1.5 million members covered by their group vision programs. Avēsis has partnerships with managed care organizations holding government contracts in 21 states.

NEW PRODUCTS

Private Exchange
WebInsure Benefits marketplace has added several health and ancillary insurance carriers and benefit administrators. WebInsure Benefits is a single cloud-based platform for brokers to manage their employer group and individual business and simplify administration. New insurance carriers and benefit administrators include the following:

  • Assurant: Individual dental plans.
  • Chard Snyder: FSA, HSA, HRA, transportation & parking reimbursement, COBRA, billing, and FMLA.
  • Guardian: Dental, vision, STD, LTD, Life, and AD&D.
  • HIC Group: Short-term medical; dental and vision; prescription discount plan; accident, sickness and hospital plans; critical illness; telemedicine; and life insurance.
  • HSA Bank: HSA, FSA, HRA, premium reimbursement account, defined contribution plans, and transit and commuter benefits.
  • The IHC Group: Health, life, disability, dental, vision, limited benefit, hospital indemnity and medical stop-loss insurance solutions to individuals and groups.
  • Renaissance Dental. 

For more information, visit www.hcentive.com

ACA Management Software

Passport is offering ACA management software with simple employee data entry screens for easy setup. Users can anticipate ACA-related obligations to avoid penalties. Employers can track offers of insurance, calculate safe-harbor options, and monitor employee hours. It includes 1094-C and 1095-C reporting with electronic filing as required. For more information, visit http://www.pass-port.com/aca-management-software.

ACA Compliance Navigator

Businesses that are required to deliver the new Affordable Care Act (ACA) 1094 and 1095 forms may be worried if they don’t have a plan for filing. PrimePay’s new ACA Compliance Navigator is open for enrollment until Dec. 31. Primepay says that it is the only platform that gives businesses time to meet the 2016 deadlines for 2015 calendar-year returns. For more information, visit http://primepay.com/aca-compliance-reporting.