Milliman chat will focus on healthcare waste

What: #HealthWaste

Where: Twitter

When: Thursday, August 2, at 10 a.m. PST/1 p.m. EST

Topic: Identifying wasteful spending in healthcare

Moderator: @MillimanHealth

About this chat
In recent years, few issues have been spoken about more than the need to curb unnecessary healthcare spending across the United States. As discussions continue at various parts of the government, Milliman invites you to join our #healthwaste Twitter chat. The chat features Milliman MedInsight consultants Rich Moyer and Marcos Dachary, who will discuss ways in which the healthcare industry can identify wasteful spending and what can be done to address the underlying issues. Rich and Marcos will be joined by two of the premier experts in this area, Dr. Mark Fendrick of Value-Based Insurance Design Health (VBID), and Dr. Michael Chernew of Harvard Medical School.

Rules of engagement
• To participate in the chat, follow the hashtag #healthwaste.
• Answer Q1, Q2, Q3… with A1, A2, A3….
• Remember to include the hashtag #healthwaste in all your tweets.
• If you are new to Twitter chats, considering using TweetChat.com.

Underwriting income continues to decline, offset by 2017 investment gains

The medical professional liability (MPL) industry remains in a financial position roughly consistent with where it has been for the past five years. The year 2017 manifested a continued decline in underwriting income for the MPL insurance industry. Movement in the industry’s profitability continues to occur at a relatively slow pace. Milliman’s Susan Forray and Chad Karls provide more perspective in this article.

This article was published in the Second Quarter 2018 issue of Inside Medical Liability.

Tax reform considerations for group life and disability insurers

How will tax reform in the United States affect the profitability of disability income and group life insurance? To offer some perspective, Milliman consultant Jennifer Fleck performed an analysis measuring the effect that the Tax Cuts and Jobs Act could have on the following products:

• Individual disability income
• Group long-term disability income
• Group short-term disability income
• Group life insurance with waiver of premium

The analysis considered three key changes in the tax law affecting life insurers as well as a fourth change, which remains an open issue. The analysis was done with industry average assumptions on profitable plan designs. Read Jennifer’s article “Tax reform: Disability income and group life” to learn more.

Healthcare under the Delegated Risk Model in California: Lower cost, high quality

Health insurance is increasingly difficult to afford. As reported in the 2018 Milliman Medical Index (MMI), the typical American family of four covered by an average employer sponsored PPO plan will have annual healthcare expenditures totaling approximately $28,166. Californians are not exempt from this trend, also paying increasingly high costs for their healthcare. According to the 2013 Berkeley Forum report, employer sponsored health insurance premium rates were projected to nearly double from 2011 to 2022, ultimately reaching $31,728 for family coverage in 2022. Those premium increases will be borne by both employers and employees. According to the MMI, on average premiums are funded approximately 2/3rds by employers, 1/3rd by employees through payroll deduction.

Some good news for Californians is that they would likely be paying a lot more without managed care plans that use the delegated model. In brief, the term “delegated model” describes a health insurance plan where financial risk for healthcare services is transferred from an insurance company to healthcare providers (e.g., physicians or hospitals). Most commonly this involves the insurance company paying a fixed, per capita dollar amount (a capitation rate) to a group of physicians, and the physicians assume financial responsibility to provide all professional services for each health plan member. They may also have full or partial risk for hospital services provided to those same members. In California, capitation can only be used in HMO plans. Other common types of plans, PPO-style plans and other fee-for-service (FFS) plans, cannot use capitation.

Measuring the impact of the delegated model on healthcare expenditures is tricky for at least two reasons. First, the average person who enrolls in an HMO plan might have a different health status from the average PPO/FFS plan enrollee. For example, they might be younger, or just healthier than average. Second, per capita healthcare costs vary by geographic area, for a variety of reasons. HMOs tend to be concentrated in urban areas, while PPO/FFS plans are prevalent in all areas of the state.

IHA Atlas Data Quantifies Savings
Fortunately, data published by the Integrated Healthcare Association (IHA) allows us to compare per capita healthcare expenditures for HMO vs PPO/FFS plans, adjusted for differences in the mix of members by health status and by geographic area. Results indicate that for commercial health insurance plans (i.e., non-Medicare, non-Medicaid), total healthcare expenditures per capita are lower under HMO plans than under PPO/FFS plans, as shown in the graph below. They were 5% lower in 2013 and 7% lower in 2015.*

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Regulatory roundup

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

IRS releases Draft 2018 IRS Form 1095-C and Form 1094-C
The Internal Revenue Service (IRS) has released Draft 2018 IRS Form 1095-C: Employer-Provided Health Insurance Offer and Coverage and Draft 2018 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. The instructions have not been released which contain the due dates of the forms.

GAO defined of ‘employer’ under Section 3(5) of ERISA
The Government Accountability Office (GAO) reviewed the Department of Labor, Employee Benefits Security Administration’s (DOL) new rule on the definition of “Employer” under section 3(5) of the Employee Retirement Income Security Act (ERISA)–Association Health Plans. The GAO found that (1) the final rule (a) establishes under title I of ERISA additional criteria under ERISA section 3(5) for determining when employers may join together in a group or association of employers that will be treated as the “employer” sponsor of a single multiple-employer “employee welfare benefit plan” and “group health plan,” as those terms are defined in title I of ERISA; (b) states that by establishing a more flexible commonality of interest test for the employer members than DOL had adopted in sub-regulatory interpretive rulings under ERISA section 3(5), and otherwise removing undue restrictions on the establishment and maintenance of Association Health Plans (AHPs) under ERISA, the regulation facilitates the adoption and administration of AHPs and expands access to affordable health coverage, especially for employees of small employers and certain self-employed individuals; and (c) sets out the criteria that would permit, solely for purposes of title I of ERISA, certain working owners of an incorporated or unincorporated trade or business, including partners in a partnership, without any common law employees, to qualify as employers for purposes of participating in a bona fide group or association of employers sponsoring an AHP and also to be treated as employees with respect to a trade, business, or partnership for purposes of being covered by the AHP; and (2) DOL complied with the applicable requirements in promulgating the rule.

For more information, click here.

The importance of accurate claims coding for MSSP ACOs

The Centers for Medicare and Medicaid Services (CMS) changes to the benchmark methodology for accountable care organizations (ACOs) entering a renewal Medicare Shared Savings Program (MSSP) agreement period in 2017 and thereafter. The 2017 methodology introduced a regional adjustment, where an ACO’s historical expenditures are adjusted upward or downward based on how their costs compare to regional expenditures on a risk-adjusted basis. Because the risk adjustment depends on an ACO’s benchmark period risk scores, accurate and complete diagnosis coding during the benchmark period now has a significant influence on the calculation of the ACO’s benchmarks in future performance years.

CMS uses benchmark year (BY) 3 risk scores for the calculation of the regional adjustment, scores that are based on diagnoses from claims incurred in BY2. MSSP ACOs anticipating renewals in 2020 need to be working this year (2018) to ensure accurate and complete coding. Similarly, 2019 is the critical year for 2021 renewals.

In this paper, Milliman’s Jonah Broulette, Noah Champagne, and Kate Fitch explain how BY3 risk scores affect the benchmark calculation for MSSP renewals, present an overview of the prior and new risk adjustment calculations in MSSP, and illustrate how the change can affect an ACO’s benchmark under various scenarios.

What are the benefits of teledentistry for the dental industry to consider?

Telehealth services come in many different forms, such as live videoconferencing or other real-time interactions, store-and-forward transmissions in which information is electronically transmitted to a practitioner who evaluates cases at a later time, remote patient monitoring by providers not in the patient’s location, and services using mobile communications devices.

Telehealth and teledentistry in particular provide a value proposition for many stakeholders within the dental industry. Teledentistry can aid in reducing dental claim costs, provide opportunities to grow individual practices, expand services to the underserved, and aid in the management of patients with chronic conditions.

For 2018, the American Dental Association (ADA) has added two teledentistry procedure codes: D9995 for synchronous teledentistry in which there is real-time interaction, and D9996 for asynchronous teledentistry in which recorded health information is sent to a practitioner to evaluate outside of real-time interaction. The ADA’s guides to using these codes indicated that teledentistry should not be thought of as a procedure but rather as a way to deliver services that treat, monitor, or otherwise engage patients.

In this article, Milliman’s Joanne Fontana and Donna Wix explore the value proposition that teledentistry could provide to dental plans, dental providers, disease management programs, and populations lacking adequate oral healthcare. They conducted a literature search on teledentistry innovations and used Milliman’s internal data sources to assess the cost impact of such products and services.