Regulatory roundup

July 28th, 2015

By Employee Benefit Research Group

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

IRS provides tax tips for employers with self-insured health plans
The Internal Revenue Service (IRS) has provided a tax tip for employers with self-insured health plans. All employers that provide self-insured health coverage to their employees are treated as coverage providers. These employers must file an annual return reporting certain information for each employee they cover.

For more information, click here.

Treasury provides update on the ACA and tax filing season
The Department of Treasury has published a post on their Treasury Notes blog providing an update on the ACA and tax filing season. To read the post, click here.

Congressional Research Service publishes health exchange report
The Congressional Research Service has released a report entitled “Overview of Health Insurance Exchanges,” which provides an overview of the various components of the health insurance exchanges.

The report includes summary information about how exchanges are structured; the intended consumers for health insurance exchange plans; and consumer assistance available in the exchanges, as specified in the ACA. It also describes the availability of financial assistance for certain exchange consumers and small businesses and outlines the range of plans offered through exchanges.

To read the entire report, click here.

CMS’ RDS program posts announcements on user accounts and Medicare Part D enrollment
The Centers for Medicare and Medicaid Services’ Retiree Drug Subsidy Program has posted the following two announcements on its website:

Maintain active user accounts to receive payment
Prepare now – Medicare Part D open enrollment period (OEP) is approaching

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First quarter financial results for medical professional liability specialty writers

July 23rd, 2015

By Javier Sanabria

If the historical relationship between first-quarter and year-end financial results holds, medical professional liability (MPL) writers should be in store for another profitable year. First-quarter direct-written premium declined for the ninth consecutive year, falling to $1.8 billion. The 4.7% decline from the first quarter of 2014 is the largest single-year percentage drop since 2011 and is a full point higher than the average annual decline of 3.7% from 2006 to 2015. First-quarter 2015 development fell in line with that of the past two years. Milliman consultants Brad Parker and Chuck Mitchell provide some perspective in this article.

This article was originally published in the July 2015 issue of the Medical Liability Monitor.

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Telehealth enhancing health microinsurance programs

July 22nd, 2015

By Javier Sanabria

In her article “m-Health: Remote access,” Milliman consultant Lisa Morgan discusses how mobile technologies, specifically telehealth services, are being used around the globe from their incorporation into health microinsurance schemes in sub-Saharan Africa to Rural Health Clinics in California to increase provider reach.

Here is an excerpt:

There are many examples of telehealth in HMI [health microinsurance] schemes (typically telephone contact with a nurse or doctor).

‘Dial-a-doctor’ programmes are already reaching millions of members of large HMI schemes, as shown in Tables 1 and 2 (below). Unsurprisingly, tech-savvy youngsters under 40 have proved to be the earliest adopters.

…m-Health not only increases efficiency but has huge potential to change health-seeking behaviour. This in turn could translate to significant savings for entire healthcare systems. With recent experience in Africa, Jonathan Govender of Bupa sees shifting customers’ behaviour towards trusting mobile interactions as a key challenge. In the UK, Vitality has just launched its new app, ‘Vitality GP’. Time will tell whether we are ready for video chats with our doctors in the UK rather than face-to-face visits. Available to all members, the Vitality app provides direct access to a private GP from home or anywhere, video consultations within 48 hours, calls to doctors 24/7, direct referrals to consultants and delivery of written prescriptions.

…m-Health is increasing provider reach, effectiveness and productivity as much as it enables consumers to move to the centre of the healthcare universe and to receive care more naturally in daily life, whether in emerging or developed markets.

As this relatively young technology matures, generates more insightful data, and comes to be better understood, it may help propel provider and insurance transactions beyond the zero-sum logic that has historically limited options for patients.

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Regulatory roundup

July 21st, 2015

By Employee Benefit Research Group

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

GAO observations of ACA’s enrollment Controls for coverage and subsidies
The Government Accountability Office (GAO) has issued a report entitled “Patient Protection and Affordable Care Act: Observations on 18 undercover tests of enrollment controls for health-care coverage and consumer subsidies provided under the Act.” The GAO was asked to examine controls for application and enrollment for coverage through the federal marketplace.

To read the entire report, click here.

JCT issues present law and background information on federal excise taxes
The Joint Committee on Taxation released the report entitled “Present law and background information on federal excise taxes” (JCT Report JCX-99-15). The document provides a description of present-law federal excise taxes, and when applicable, background information on trust funds financed with excise tax revenues.

The document contains information on excise taxes relating to employee pension and benefit plans and excise taxes related to healthcare.

To entire report can be downloaded here.

IRS issues answers regarding PCORI fee
The IRS has issued 16 questions and answers regarding the Patient-Centered Outcomes Research Trust Fund Fee.

To read the questions and answers, click here.

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Will the increase in the coinsurance rate offer insurers relief?

July 20th, 2015

By Javier Sanabria

The Centers for Medicare & Medicaid Services (CMS) recently announced that the 2014 transitional reinsurance program’s coinsurance rate would be 100 % rather than 80% as originally stated. This is good news for insurers in the health exchange’s individual market whose reimbursement requests will be paid in full (and then some). In this article, Milliman’s Daniel Perlman, Doug Norris, and Hans Leida discuss the financial implications this change could have on insurers.

For issuers of ACA-compliant plans in the individual market, the increased coinsurance has a fairly obvious direct positive impact on 2014 financial performance: more will be collected than many issuers likely assumed when preparing annual statements for 2014. Any issuer that had computed its transitional reinsurance recovery accruals at year-end 2014 based upon the originally announced coinsurance parameter will now receive an additional 25% (because 100% / 80% = 1.25) given the change in coinsurance. The impact of this change will vary significantly by insurer, but could be material in relation to overall individual ACA market claim costs for many insurers. It may not be uncommon to see reductions in net paid claims of 2% to 4% as a result of this change.

The CMS announcement suggests that the reimbursement requests made by insurance companies may be low enough that the transitional reinsurance program could pay 100% of the coinsurance rate and carry a surplus into 2015. The authors estimated that this surplus would be between $1 billion and $2 billion. In fact, based on new information released by CMS on June 30, 2015, it is now known that the surplus carried forward will be approximately $1.8 billion, in the range the authors predicted.

If, even after the increase in coinsurance, total payouts are less than the $9.7 billion in reinsurance assessments collected, there will be additional funds to roll forward into 2015. These additional funds could help create the same (or similar) outcome for the 2015 plan year by increasing the size of the reinsurance pool by any amount carried forward from 2014. (This could conceivably happen for the 2016 plan year as well, for similar reasons.)

Is there a surplus available to carry forward to 2015, and if so, how big is it? We don’t know for sure…however…[there may be] somewhere between $1 billion and $2 billion unspent.

…The bottom line is that there would be more money available to make reinsurance payments for the 2015 plan year. This is good news for issuers of ACA-compliant individual market plans. However, issuers should be cautious about relying on further enrichment in the 2015 program parameters, as (among other concerns) it is possible that the current parameters have already assumed some amount of carryover.

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Regulatory roundup

July 14th, 2015

By Employee Benefit Research Group

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

IRS releases interim guidance regarding expatriate health plans
The Internal Revenue Service (IRS) released Notice 2015-43, which provides interim guidance based in part on the definition of expatriate health plans set forth in the temporary relief under ACA Implementation Frequently Ask Questions (FAQs) Part XIII (issued March 8, 2013) and Part XVIII (issued January 9, 2014). Additionally, the notice provides guidance on the requirements for certain individuals to be considered qualified expatriates under the EHCCA. The notice does not apply to the health insurance providers fee imposed by § 9010 of the ACA.

To read the entire notice, click here.

Affordable Care Act (ACA) Assurance Testing System (AATS) information
The IRS has posted information regarding the ACA’s Assurance Testing System (AATS) which is now open for the testing of information returns that will be processed in 2015.

For more information, click here.

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How can insurers optimize their risk transfer payments?

July 10th, 2015

By Javier Sanabria

In this article, Milliman’s David Liner and Jason Siegel analyze data from the Centers for Medicaid & Medicare Services (CMS) on risk adjustment transfers for the 2014 benefit year. The article examines some components of the risk adjustment program and proposes strategies that issuers of new and existing plans should consider to ensure optimal risk transfer payments.

Here is an excerpt:

New health plans face a number of competitive disadvantages related to risk adjustment as discussed in this paper. However, these disadvantages can be mitigated with effective optimization strategies. Note that many of these strategies apply to existing health plans as well and should be explored by any issuer in the ACA markets.

There are at least three components to an impactful risk adjustment optimization strategy:

1. Robust administrative system

2. Coding accuracy initiatives

3. Provider and enrollee engagement

An optimization strategy that does not include each of these components will not optimize risk adjustment outcomes.

A robust administrative system serves as the foundation for risk adjustment optimization strategies. A sound administrative system is required for valid data submission and enables health plans to effectively pursue coding improvement initiatives. System audits are an effective technique for validating a recently implemented administrative system.

…Another best practice involves developing elaborate algorithms on top of large commercially available datasets, using all possible elements from a health plan’s data to identify potentially missed diagnoses. This approach relies on identifying patterns among at least medical procedures, comorbidities, specialist office visits, and prescription drug utilization. Best in class models are set up to handle numerous interactions between these data elements and maximize the extrapolation power of these data through machine learning techniques.

Provider engagement is also a key strategic component because diagnosis coding starts with providers. Levels of engagement may range from education only to elaborate compensation schedules. Educating providers on the importance of valid diagnosis coding may improve risk adjustment outcomes. An additional level of provider engagement may be achieved by incentivizing optimal coding through reimbursement arrangements. Achieving a high level of provider engagement may require more effort in the short term than other strategies, but can also produce benefits over a longer horizon.

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HR fatigue: Realities and solutions

July 8th, 2015

By Sue Reed

Reed-SueHuman resource (HR) professionals experience job fatigue due to constantly changing organizational and regulatory environments. This continuation of the HR fatigue series explains three realities facing HR professionals in today’s climate and offers a solution that can benefit them.

Reality 1: HR is a cost center, not a profit center.
HR has a critical role to play in the success of an organization, but HR must be extremely stringent in the allocation of resources because it is not a money-earning department. This means HR must allocate resources to the areas that can drive company profitability and streamline administrative time and resource-consuming activities.

Reality 2: Attracting and retaining key talent is a challenge.
As technology continues to increase in all aspects of work and life, critical technical resources are becoming more difficult to recruit and retain. HR professionals need to spend more time strategizing about the most effective attraction and retention drivers for their organization.

Reality 3: Administrative costs must be carefully managed.
Healthcare reform adds an administrative burden to an already stretched HR organization. In addition, the continued rise in healthcare costs shifts a greater burden to HR professionals to find ways to reduce costs administratively.

Outsourcing health and welfare benefits administration can begin to solve HR fatigue and allow HR professionals to focus on business issues. Outsourcing benefit administration includes:

• Programming business rules to ensure accurate, consistent interpretation and implementation of eligibility rules, waiting periods, and documentation to prove employees meet requirements. HR professionals are no longer required to be experts to navigate this complicated process.

• Administering welfare benefits such as life, accidental death and dismemberment, and disability insurance, which is often complex and can be administratively burdensome, resulting in hidden costs for the employer. Benefit administrators work with the insurance carrier to interpret and program contingent benefits and evidence of insurability rules to streamline the administration of these benefits.

• Implementing electronic transmission of carrier and payroll files to enable efficient, accurate, and prompt benefit information for employees while eliminating administration for HR and finance departments.

• Interpreting and programming new regulatory requirements, such as the Patient Protection and Affordable Care Act, which can eliminate new administrative responsibilities for HR professionals.

When implemented correctly, outsourced benefit administration can reduce HR fatigue and increase an organization’s productivity. For more information about Milliman’s benefit administration services, click here.

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U.S. Supreme Court rules in favor of same-sex marriages and the Affordable Care Act subsidies

July 3rd, 2015

By Employee Benefit Research Group

The U.S. Supreme Court has handed down decisions on two significant cases that have direct or indirect implications for employer-sponsored retirement and healthcare benefit plans. This Client Action Bulletin summarizes these cases of interest for employers that sponsor such plans.

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Employer-sponsored insurance: Looking beyond ACA planning

June 30th, 2015

By Javier Sanabria

As employers look for new ways to offer affordable healthcare benefits to their employees they will have to consider other solutions besides cost-shifting. In this Employee Benefit News article, Milliman’s Dan Bostedt discusses some evolving trends that may shape employer-sponsored healthcare moving forward.

Here is an excerpt:

Rethinking total rewards
Historically, health plans with high benefit levels have been a mainstay of a total rewards package. Going forward, should there be more emphasis on other components, or new components, in the total rewards package? Perhaps it is time to reallocate total rewards spending away from traditional “entitlement” types of benefits. Some goals could be:

Higher percentage of total rewards budget used for performance-based rewards;
Focus on rewards and approaches where costs can be better controlled at the employer level;
Emphasis on rewards that support the current cultural strategy;
More focus on what newer employees value most — tastes and priorities are changing.
As an example, would employees value a performance-based bonus, with lucrative payouts, over the current level of health plan coverage offered? Would that in turn help provide better alignment of total rewards to business goals?….

Private exchanges
…The expansion of private exchanges may require further evolution to more component-based rather than package offerings.

Defining the features and capabilities that would add the most value to an organization may require looking at things differently. For example, some employers may not value a private exchange as a whole, but would find value in purchasing just outsourced administration, enrollment, communications, and participant education. Others may want to use an exchange, but would like greater control over the number and types of options and offer them on a self-funded basis. Regional and national options built on narrower networks may also be valued, but perhaps just with respect to network rental versus a private exchange package.

The key is to define the specific components that would most benefit organizational goals and needs and then to press the private exchange marketplace for the flexibility of component offerings.

Physician-focused consumerism
In the future, more emphasis may be placed on physician-focused consumerism rather than the current focus on employee (participant) consumerism. This is because physicians are often the main decision-makers regarding the use of healthcare services, especially high-cost and/or high-volume services. Physician-focused consumerism will likely develop as a set of initiatives designed to align physician decision-making with high-quality health care outcomes provided in a cost-efficient manner. It can include the redesign of financial incentives for providers, physicians having greater access to broader patient-level data, updated treatment decision support tools, ongoing education about treatment alternatives, and an understanding of the financial impact of alternatives on patients. Physician-focused consumerism can be the basis for collaborative efforts among employer health plan sponsors, provider systems, and physicians. Provider network analysis, especially for narrower networks, may expand to include specific audits of the attributes of the providers in the networks.

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