Regulatory roundup

October 20th, 2014

By Employee Benefit Research Group

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

Trends in employment-based health insurance coverage
The Bureau of Labor Statistics (BLS) has published an article on its journal, Monthly Labor Review, examining employer-sponsored health insurance trends. The article highlights data from the BLS’s National Compensation Survey which show that access to employer-provided health insurance declined from 1991 to 2002, chiefly because of narrower access among part-time workers. Then, from 2003 to 2012, access exhibited a significant further drop and participation also fell significantly. Over the latter period, non-union workers, part-time employees, and lower wage workers, as well as those employed at small establishments, had a lower incidence of employer-provided health insurance.

To read the entire article, click here.

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2015 cost-of-living adjustments for Medicare benefits

October 16th, 2014

By Employee Benefit Research Group

The Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) has announced cost-of-living adjusted figures for Medicare Part A and Part B for 2015. In April this year, CMS announced the updated amounts for the Medicare Part D standard prescription drug benefit for 2015. As a convenience, those figures are also provided in this Client Action Bulletin.

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Regulatory roundup

October 13th, 2014

By Employee Benefit Research Group

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

Medicare Parts A and B COLAs for 2015
The Centers for Medicare & Medicaid Services (CMS) has issued the cost-of-living adjustments applicable to components in the Medicare program. For 2015, the rates will be as follows:

• Medicare Part A (Hospital Insurance) payroll tax remains at 1.45% (paid by employers and employees) on all wages, plus an additional 0.9% (for a total of 2.35%) for high-income individuals (earnings over $200,000 for an individual ($250,000 for joint filers)), to be assessed only the employees.

• Medicare Part A inpatient hospital deductible increases to $1,260 (up from $1,216 in 2014).

• Medicare Part A daily coinsurance amounts: $315 for the 61st through 90th days of hospitalization in a benefit period (up from $304), $630 for lifetime reserve days (up from $608), and $157.50 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period (up from $152).

• Medicare Part A premium to purchase coverage: $407 (down from $426 in 2014), and for those entitled to a reduced monthly premium, $224 (down from $234 in 2014).

• Medicare Part B deductible: $147.00 (unchanged from 2014).

• Medicare Part B standard monthly premium: $104.90 (unchanged from 2014).

The following chart shows the 2015 Medicare Part B monthly premiums based on income tax filing (unchanged from 2014):

Individual Income Joint Income  Part B Premium
$85,000 or less $170,000 or less $104.90
$85,001 – $107,000 $170,001 – $214,000 $146.90
$107,001 – $160,000 $214,001 – $320,000 $209.80
$160,001 – $214,000 $320,001 – $428,000 $272.70
Above $214,000 Above $428,000 $335.70

The figures above are from notices that have been published in the Federal Register of October 10, 2014.

Medicare Part A

Medicare Part A (hospital deductible)

Medicare Part B

CMS issues guidance for small employers to enroll in SHOP coverage
The CMS has issued an announcement with helpful links for employers to enroll online in the Small Business Health Options Program (SHOP). The announcement reminds small employers that starting November 15, 2014, they will be able to begin enrolling their small businesses. To enroll in SHOP coverage, employers must have less than 50 full-time employees and meet certain other requirements.

For more information, click here.

ACA’s FAQs on reference pricing and maximum out-of-pocket limitations
The Departments of Treasury, Labor, and Health and Human Services, and the CMS have issued Patient Protection and Affordable Care Act (ACA) frequently asked questions (FAQs) regarding pricing and the maximum out-of-pocket requirements.

To read the FAQs about ACA implementation (Part XXI), click here and here.

CBO working paper: Assessing the design of the low-income subsidy program in Medicare Part D
The Congressional Budget Office (CBO) released a new working paper entitled “Assessing the design of the low-income subsidy program in Medicare Part D.” The study finds that the rules of the low-income program in Part D create incentives for low-income subsidy plans to be less responsive to the number of plan sponsors, to raise their bids toward the benchmark, and to strategically bid in ways that raise the low-income benchmark and the government’s cost.

To read the entire working paper, click here.

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Regulatory roundup

October 7th, 2014

By Employee Benefit Research Group

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

IRS updates draft ACA forms
The Internal Revenue Service (IRS) has updated draft forms for the reporting of health coverage that employers offer to employees under the Patient Protection and Affordable Care Act (PPACA) in 2014. These draft forms were first released on July 24, 2014.

Form 1095-C (Employer-Provided Health Insurance Offer and Coverage)
This form includes information about the health coverage offered to employees by employers. Part II includes information about the coverage, if any, an employer offered an employee and the employee’s spouse and dependent(s). If individuals purchased health insurance coverage through the health insurance marketplace and would like to claim the premium tax credit, this information will assist in determining whether they are eligible.

Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns)

Form 1095-B (Health Coverage)
This form provides information needed to report on income tax returns that individuals, their spouses, and their dependents had qualifying health coverage (referred to as minimum essential coverage) for some or all months during the year.

Form 1095-A (Health Insurance Marketplace Statement)
This form provides information individuals need to complete Form 8962 (Premium Tax Credit).

CMS launches quick reference guide for obtaining a controlling health plan HPID
The Centers for Medicare and Medicaid Services (CMS) launched a new reference guide with step-by-step instructions for obtaining a controlling health plan (CHP) health plan identifier (HPID) under HIPAA. As explained in the guide, users that need to obtain a CHP HPID will go through the CMS Enterprise Portal, access the Health Insurance Oversight System, and apply for the HPID.

To access the reference guide, click here.

HHS and CMS post FAQs on HPID requirements and procedures
The U.S. Department of Health and Human Services (HHS) and CMS posted frequently asked questions (FAQs) providing guidance on requirements and procedures for obtaining a health plan identifier (HPID). The FAQs address:

• The difference between a health plan and a payor
• The purpose of the Other Entity Identifier and who may apply for it
• Use of a HPID for other business purposes
• Authorization of an individual to obtain a HPID for the health plan
• When a health plan must obtain a HPID
• Definition of a “small health plan” and absence of annual receipts
• Absence of standard terminations
• How to obtain a HPID
• How to obtain a HPID without a North American Industry Classification (NAIC) Code number or Payer ID
• Requirements for self-insured health plans
• Requirements for third-party administrators
• Applicability to fully-insured plans
• Who must obtain HPIDs for fully-insured health plans
• Applicability to flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs), wrap-plans, or cafeteria plans

To access the FAQs web page, click here.

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Health data analytics for identifying wasteful services

October 1st, 2014

By Nancy Zoelzer

Zoelzer-NancyEliminating inefficient and unnecessary medical services improves overall healthcare efficiency while reducing costs. In 2009, the Institute of Medicine (IOM) identified $750 billion of wasted spending with unnecessary services accounting for $210 billion. The U.S. Congressional Budget Office (CBO) has estimated that 30% of medical care in the United States is unnecessary care. Removing this waste and unnecessary care from the system will reduce costs, and is an opportunity to improve quality and patient safety.

Health data analytics for identifying wasteful services

There are a number of use cases for analyzing health claims data to find wasteful and likely to be wasteful services.

• Quantify necessary vs. wasteful services
• Identify opportunities for cost savings
• Use provider profiling and pay for performance risk sharing reporting
• Use employer group reporting to convey the value of health plan services provided to employers

In a pilot study of wasteful services, Milliman looked at one health plan’s claims data for Medicare and commercial over a one-year period (November 2012 to October 2013). Observations from that study found that 21% of members had at least one wasteful service, 25% of all services provides were wasteful, and 2.12% of the total claims cost allowed dollars were wasteful. Further data analysis found that 80% of the wasteful dollars came from only four measures:

• Stress cardiac imaging or advanced noninvasive imaging (58%, $8,568,369)
• Annual EKGs or cardiac screening (12%, $1,779,260)
• Lower back pain image (6%, $940,363)
• ED CT Scans for Dizziness (4%, $533,876)

To assist in the identification of wasteful services Milliman, along with VBID Health, has developed the MedInsight Waste Calculator. This analytical tool provides actionable data to support healthcare quality, efficiency, and effectiveness reporting. The calculator brings together clinical expertise and powerful data analytics—allowing healthcare managers to target and reduce wasteful spending.

To learn more about the MedInsight Waste Calculator, click here.

This article first appeared at Milliman MedInsight.

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Regulatory roundup

September 29th, 2014

By Employee Benefit Research Group

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

HHS releases rate review annual report (September 2014)
The U.S. Department of Health and Human Services (HHS) has released a new report showing that, in 2013 alone, consumers benefited from $1 billion in savings from health insurance rates that were lower than originally requested. This includes $290 million in savings for individuals and families, and $703 million in savings for small employers. Combined with refunds consumers received because of the 80/20 rule, consumers saved more than $2.8 billion in 2012 and 2013.

To read the entire report, click here.

HHS issues guidance for same-sex couples under HIPAA
HHS has released new guidance clarifying that same-sex couples who are legally married, even if they live in jurisdictions that don’t recognize the marriages, are afforded the same privacy protections under HIPAA rules as other married couples. This guidance was developed to assist covered entities in understanding how the Windsor decision may affect certain of their privacy rule obligations.

For more information, click here.

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Evaluating opportunity in the CMMI BPCI program: Comparison of PAC utilization to benchmarks

September 25th, 2014

By Javier Sanabria

The opportunity to reduce Medicare claims cost in the Bundled Payment for Care Improvement Initiative (BPCI) of the Center for Medicare and Medicaid Innovation (CMMI) is typically in the post-acute care (PAC) period. Analyzing the opportunity to reduce Medicare PAC spending requires providers to adopt a payor state of mind—payor tools and approaches will be very helpful. Benchmarking to best practices is one of those tools.

Milliman has developed nationwide average and well-managed (WM) benchmarks for PAC periods of one to 30, 31 to 60, and 61 to 90 days. Milliman’s Bruce Pyenson, Kate Fitch, Michele Barrios, and Tyler Engel provide perspective in this healthcare reform paper.

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Insurer considerations related to ACA auto-reenrollment

September 23rd, 2014

By Javier Sanabria

The federal health exchange’s automatic reenrollment process was intended to simplify renewing policies. However, auto enrollment could also introduce unpredictability for insurers. This New York Times article examines how these issues will impact the exchange and quotes Paul Houchens offering some perspective in regards to the financial implications.

Here’s an excerpt:

Automatically renewing marketplace plans will be a mistake for many people, but it is an especially risky one for the 85 percent of people who qualified for some sort of subsidy. The Obama administration has chosen not to recalculate the value of tax credits for people who don’t return to the Healthcare.gov site.

If your subsidy should go down – either because you have received a raise since last year or because the benchmark plan in the market became cheaper – you could end up owing the government a lot more money than you think, and you won’t find out until tax time.

…Not everyone has to worry about these invisible price changes, especially if incomes haven’t changed. But in markets where federal rules apply and the benchmark is going down a lot, it pays to return to the marketplace before renewing. Places where that will be an issue include parts of Georgia, Indiana and Ohio – where benchmark prices are declining by more than 15 percent. For people in those areas, returning to the marketplace could prevent a surprise tax bill.

“The structure makes for a very competitive environment among the insurance carriers,” said Paul Houchens, an actuary at Milliman, who estimates that, in some cases, what looks like a 5 percent premium rise could actually mean an increase of more than 30 percent. “But,” he said, “I can see how it would create more confusion for consumers.”

To understand how the reenrollment process will affect premiums and potentially create financial barriers to coverage in 2015, read this healthcare reform paper.

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Regulatory roundup

September 22nd, 2014

By Employee Benefit Research Group

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

IRS releases draft instructions for ACA-related forms
The Internal Revenue Service (IRS) has released draft instructions for two forms associated with individual obligations under the Patient Protection and Affordable Care Act (ACA):

Form 8962 draft instructions: Premium tax credit to be completed for health insurance coverage in a qualified health plan purchased through a Health Insurance Marketplace (exchange).
Form 8965 draft instructions: Health coverage exemptions to be completed to report a coverage exemption granted by the marketplace or to claim a coverage exemption on a tax return.

IRS releases guidance expanding the permitted election rules for health coverage under section 125
The IRS released Notice 2014-55, which expands the permitted election rules for health coverage under a § 125 cafeteria plan and addresses two specific situations in which a § 125 cafeteria plan participant is permitted to revoke his or her election under the § 125 cafeteria plan during a period of coverage. The first situation involves a participating employee whose hours of service are reduced so that the employee is expected to average less than 30 hours of service per week but for whom the reduction does not affect the eligibility for coverage under the employer’s group health plan. The second situation involves an employee participating in an employer’s group health plan who would like to cease coverage under the group health plan and purchase coverage through a competitive marketplace established under § 1311 of the ACA, commonly referred to as an exchange or marketplace.

To read Notices 2014-55, click here.

IRS issues guidance providing the applicable dollar amount for determining the PCORI fee
The IRS issued Notice 2014-56, providing the applicable dollar amount that applies for determining the Patient-Centered Outcomes Research Institute (PCORI) fee for policy years and plan years ending on or after October 1, 2014, and before September 30, 2015.

To read Notice 2014-56, click here.

IRS releases final rule on $500,000 deduction limitation for remuneration by insurance providers
The IRS has released a final rule on the application of the $500,000 deduction limitation for remuneration provided by certain health insurance providers under Section 162(m)(6).

The final rules will be published in the Federal Register on September 23, 2014.

For more information, click here.

Benefit news ,

Introduction to utilization health waste in the U.S. healthcare marketplace

September 15th, 2014

By Michael Chernew

The American healthcare system is experiencing rapid change, largely driven by the recognition by both public and private payors that the trajectory of healthcare spending growth must be slowed. Despite the recent slowdown in healthcare spending growth, which many attribute to the recession, efforts to transform benefit design and payment systems are proceeding rapidly. For example, public payors are both cutting payment rates and experimenting with bundled and global payment models. Private payors are adopting similar payment models and developing more sophisticated benefit designs that encourage patients to seek care from low-cost and maybe high-value providers, and to avoid expensive and maybe low-value services.

In this environment it is crucial to try to eliminate waste. The new payment models allow providers to share some of the savings if utilization of wasteful services can be curtailed. The challenge of course is identifying which services are wasteful. The fact that waste exists in the healthcare system is widely accepted. Berwick and Hackbarth (2012) estimate there is about $200 billion in waste that is due to overtreatment in the U.S. healthcare system, almost 10% of total spending.

But eliminating that waste may be a challenge. Like everything in healthcare, the waste is likely to vary across geography and, more importantly, across providers. Identifying which providers to focus on is a challenge. More fundamentally, aggregate measures of waste are not necessarily helpful to providers. Detailed, operational measures that can be applied to provider systems are needed. Fortunately, there has been a recent increase in effort to identify wasteful services. A number of lists exist. Perhaps the most prominent of these efforts is the Choosing Wisely campaign, sponsored by the American Board of Internal Medicine Foundation, which challenged specialty societies to identify wasteful practices. Other panels, such as the U.S. Preventive Services Task Force, have identified services that might be wasteful. Thus clinically meaningful knowledge of what is wasteful exists.

Translating the knowledge of what is wasteful into tools that can be applied to identify that waste at the system level is difficult. Claims data is not ideal in many cases to identify waste. Often the measures of waste depend on patient history. Clinical knowledge and information technology (IT) expertise are needed. Academic efforts to quantify waste using subsets of available measures are just beginning. For example, using a limited number of services, Schwartz et al. (2014) find that 0.6% to 2.7% of Medicare spending may be wasteful and between 25% and 40% of beneficiaries have received at least one low-value service. Moreover, they found that there was significant regional variation in spending on low-value services, suggesting some providers are more prone to use them than others. Finally, different measures of low-value services were correlated across regions, suggesting that measures of them based on a small number of services may be indicative of broader patterns of waste.

Commercial tools to quantify practice patterns will be crucial to many cost containment activities. Data can help focus efforts on reducing waste and thereby improve value. Such tools could be used to support payment reform, provider education, tiered benefits, or even value-based insurance designs. One way or another, spending growth must be contained. Our goal must be to do so in a way that improves value.

This article first appeared at Milliman MedInsight.

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