Agencies propose new, expanded Form 5500 group health plan reporting

Group health plan sponsors would be required to provide significant amounts of information about the plans when filing the annual Form 5500 with the Department of Labor (DoL), under a recently released proposed rule from the agency, along with a separate proposed rule from the DoL, Treasury/IRS, and the Pension Benefit Guaranty Corporation.

The DoL’s proposal, which affects only ERISA-covered plans, would amend the reporting and disclosure requirements for other welfare benefits and retirement plans, but this Client Action Bulletin (CAB) focuses only on group health plan information, including from sponsors of grandfathered group health plans and from sponsors of certain small plans that to date have been exempt from filing. The DoL anticipates applying the new requirements to plan years starting in 2019 (i.e., filings made in 2020).

For simplicity, this CAB refers to both sets of rules as the DoL’s proposed rule.

Long-term care insurance valuation: An industry survey of assumptions and methodologies

Milliman consultants Al Schmitz, Daniel Nitz, Tim Kempen have published a long-term care (LTC) insurance valuation survey. The survey reviews and documents the assumptions and methodologies related to the determination and testing of active life and disabled life reserves as well as the asset strategies and investments backing the reserves.

To download the research report, click here.

Regulatory roundup

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

Draft publication on test package for electronic filers of 2017 ACA information returns processing
The IRS has released draft “Publication 5164 (Early Look): Test Package for Electronic Filers of Affordable Care Act (ACA) Information Returns (AIR) (Processing Year 2017).” The publication contains general and program specific testing information for use with ACA Assurance Testing System (AATS). Software developers are required to pass pre-defined AATS test scenarios for the forms that they will support. Transmitters and issuers are required to pass one-time communication tests for the forms they will file.

To download the draft publication, click here.

Guidance on health coverage tax credit hardship exemption
The Centers for Medicare and Medicaid Services (CMS) released guidance providing information about a hardship exemption that may be claimed through the tax filing process for individuals who qualify for the Health Coverage Tax Credit (HCTC) but who are not enrolled in HCTC-qualifying health insurance coverage. This hardship exemption applies only for certain months in 2016.

For more information, click here.

Tax year 2016 schemas and business rules for ACA AIR
On its website, the IRS published information and technical guidance for software developers and transmitters who are interested in developing software for AIR for tax year 2016. Included are the XML schemas, business rules, and release memorandums.

For more information, click here.

Assess medical malpractice policies before acquiring physician groups

Hospitals and health systems seeking to acquire physician groups can increase their negotiating power, and reduce overall claims costs, and more. However, these organization need to vet a physician group’s medical malpractice coverage thoroughly to better understand the financial implications involved with its acquisition.

In their article “Medical malpractice insurance: A key concern when acquiring physician groups,” Milliman’s Richard Frese and Andy Hoffman discuss the importance of assessing a physician group’s insurance policy. The following excerpt provides perspective on some coverage costs that hospitals should examine before executing an acquisition.

Several key costs must be estimated to provide management with the best information to make an appropriate decision. A critical cost that should be estimated is the unpaid claims liability—i.e., the amount the group is responsible for in the incidents that occurred up to a certain date. Medical malpractice is a long-tailed line of business, has losses that can vary drastically from year to year, and can have significant lags between the occurrence and reporting of claims. These factors can make the estimation of unpaid claim liability difficult.

In addition to estimating unpaid claim liability, which is essential, hospitals and health systems can benefit from other estimations that are less frequently performed. For example, to demonstrate the benefits of acquisition, the insurance costs can be estimated for the hospital and physician groups separately and combined. The projected future losses for the physician group can be estimated as a basis for comparing commercial insurance rates to determine whether it makes sense to retain the costs or purchase commercial coverage.

Considered together, the cost differences, benefits, and risk factors can help hospital and health system leaders decide whether acquiring a physician group makes sense. Failure to account for a physician group’s losses, especially if the group has had adverse loss experience, can be financially disastrous. However, by carefully planning for costs and undertaking proper risk management and consolidation efforts, an acquiring organization can ensure that a physician practice acquisition will be beneficial to all parties involved.

Transgender health coverage considerations

This paper written by Milliman’s Susan Philip and Andrew Naugle highlights recent state and federal policy changes concerning healthcare benefits for transgender individuals. The authors also examine health insurance clinical policies governing the coverage of services related to gender transition. Lastly, Susan and Andrew provide future considerations for healthcare payers, including appropriately capturing data relevant to the healthcare needs of the transgender and gender non-conforming population.

First quarter financial results for medical professional liability specialty writers

The medical professional liability (MPL) market began 2016 experiencing similar trends to those seen in recent years. The first quarter of 2016 has seen the market maintain favorable calendar-year financial results despite declining premium volume and steadily increasing operating ratios. If the historical relationship between first quarter and year end holds, MPL speciality writers can expect weaker financial results compared to recent years yet still an overall profitable year. This article by Milliman’s Brad Parker and Eric Wunder provides more perspective.

This article was originally published in the July 2016 issue of the Medical Liability Monitor.

Regulations impact group retiree pharmacy benefit plans

An evolving regulatory landscape is influencing the financial value of Employer Group Waiver Plans (EGWPs) and Retiree Drug Subsidy (RDS) plans. Plan sponsors should monitor the effect that new and proposed rules may have on their group retiree pharmacy benefits. In this article, Milliman actuaries Michelle Angeloni and Tracy Margiott discuss trends and changes affecting EGWPs and RDS plans as highlighted in Figure 2 below.

Figure 2 - group retiree pharmacy benefits market

Cost differences between open and minimally invasive surgery

Numerous studies comparing the safety and efficacy of minimally invasive surgery (MIS) and open surgery have shown that MIS is associated with shorter intensive care and hospital stays and lower rates of transfusion, readmission, surgical site infections, pain, mortality, and time taken to return to normal activities or work. Despite evidence supporting the benefits of MIS, its use varies widely by region and hospital. In this study, Milliman consultants analyze the difference in payer costs between MIS and open surgery in a commercial population for four commonly performed elective surgical procedures.

This article was originally published in the September 2015 issue of Managed Care.

Regulatory roundup

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

Employer shared responsibility appeal form released
The Department of Health and Human Services (HHS) issued a health insurance marketplace appeal request form for employers.

To download a copy of the form, click here.

Spending for Social Security and major healthcare programs
The Congressional Budget Office published “The 2016 Long-Term Budget Outlook” report which describes the agency’s projections of federal spending, revenues, deficits, and debt over the next 30 years.

The CBO projects that spending for Social Security would increase noticeably as a share of the economy—from 4.9 percent of gross domestic product (GDP) in 2016 to 6.3 percent in 2046—if current laws generally remained unchanged. Spending for the major healthcare programs is projected to grow even faster – net outlays for those programs would increase from 5.5 percent of GDP now to 8.9 percent in 2046. The major healthcare programs include Medicare, Medicaid, and the Children’s Health Insurance Program, as well as spending on subsidies for health insurance purchased through the marketplaces established by the Affordable Care Act (ACA) and related spending. About three-quarters of the increase in spending for the major health care programs would be for Medicare.

To download the report, click here.

How will providers be reimbursed under MACRA?

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) reforms how providers are reimbursed for care provided under Medicare Part B. In their article “MACRA: Overview for providers,” Milliman consultants Colleen Norris and Mary van der Heijde offer questions and answers concerning the three reimbursement adjustment options eligible clinicians will have under MACRA.

The article is part of a series examining the impacts of MACRA on providers, alternative payment models, and health plans. To read other articles in the series, click here.