Healthcare Town Hall

Employer group reporting is a requirement for most health plans and third-party administrators in today’s healthcare environment. Almost every large group employer seeking healthcare coverage has some requirement in its selection process related to reporting on membership and claim experience. These requirements can vary significantly, depending on the analytic sophistication of the employer and/or broker working with the group. The real questions are, what do employer groups really want from employer group reporting and what do employers really do with these reports?

Milliman MedInsight has recently added to its portfolio of standard reports a new “storybook” employer group report that focuses on meeting the needs of employers looking to understand their healthcare spending. Additionally, the report can serve as the foundation for data-driven discussions with brokers or sales agent about how to better tailor benefit design and healthcare investment to better serve employees’ needs and the employer’s investment.

The report development process was a collaborative effort between several Milliman clients and MedInsight data analytics consultants. At the start of the project the development team identified two primary objectives for the new storybook employer group report:

1. Enable the employer to understand and reconcile its historical healthcare spend.
2. Provide the employer data-driven insight into how it might wish to change its benefit offerings in the future—identify action items.

As the report specification evolved further, several secondary requirements emerged: the report had to be easy to read and understand, the report had to have meaningful comparative benchmarks to help an employer put its experience in context, and the report needed to be modifiable at run time by the sales group to add comments and adjust report output.

Some of the analytic tactics employed in the report to achieve the goals for the first objective above are:

1. Analysis of both paid and allowed amounts by Milliman’s Health Cost Guidelines™ categories.
2. Trend analysis between a definable current time period and prior time period.
3. Benchmark comparatives between a similar block of business for the health plan and/or a set of benchmarks derived from Milliman’s research database.
4. Reconciliation analysis of claims by paid date.
5. Membership analysis by demographic and benefit design dimensions.
6. Concurrent risk scores to measure the illness burden of the population between time periods.

Some of the analytic tactics employed in the report to achieve the goals for the second objective above are:

1. Use of Milliman’s Chronic Condition Hierarchical Groupings (CCHGs) to identify medical condition prevalence when considering wellness program initiatives.
2. Evidence-based measures to identify gaps in preventive care that influence the long-term health of the population.
3. Predictive risk scores for the employer group and the other similar groups within the health plan to forecast how future healthcare expenditures might compare.
4. Frequency of potentially avoidable emergency room use.
5. Provider network utilization analysis.
6. Pharmacy use analysis for mail order, generic use, and specialty drug use.

Milliman’s design of the employer group report will continue to evolve as we present the report to more clients and get additional feedback from our user base. If you’re interested in learning more about this new feature or would like to contribute your ideas to future versions of the report, please contact your Medinsight consultant.

This article first appeared at Milliman MedInsight.

Employers benchmarking, Brian Studebaker, employer group reporting, healthcare analytics, MedInsight

Employers that sponsor group health plans must provide participants specific information about the plans’ benefits and coverage, as well as a uniform glossary of coverage and medical terms, under a final rule issued jointly by the Departments of Labor, Treasury, and Health and Human Services implementing requirements of the health reform law (Patient Protection and Affordable Care Act, or PPACA). The new disclosures are in addition to any summary plan description (SPD) already furnished to participants, although the final rule permits an intact and prominently displayed summary of benefits and coverage (SBC) to be part of the SPD. The agencies also issued related guidance, including a final SBC template (and a sample completed template) and instructions, and a final uniform glossary.

The final rule, which is effective April 16, 2012, requires the SBC to be given to participants starting with open enrollment periods that begin on or after September 23, 2012. Thus, for calendar-year plans, the first SBCs must be furnished for the open enrollment period that will be held this November or December for 2013; for sponsors that do not have open enrollment periods and for special enrollments (such as new hires or new dependents), the SBC must be provided for plan years beginning on or after September 23, 2012 (i.e., January 1, 2013, for calendar-year plans).

For more, reference the latest Client Action Bulletin.

Employers employers, plan summaries

Or more accurately, now may be the time for employers to look toward using an EGWP (Employer Group Waiver Plan) with a wraparound supplemental plan to provide more cost-effective prescription drug benefits.

For health plans that offer their retired employees prescription drug benefits, new rules from the Centers for Medicare and Medicaid Services (CMS) make the option of an EGWP/wrap attractive as a way to achieve significant plan savings.

Many employers have heard about this opportunity, but exactly how advantageous is the EGWP/wrap option, and how can they change to it from current plans, such as those involving the retiree drug subsidy (RDS)?

This paper delves into these questions.

Employers EGWP, Steve May

This Bloomberg Law Reports article describes the benefits and drawbacks associated with captive insurance companies, and analyzes the efficacy of providing medical benefits of U.S. employees as an employee benefit, either for full coverage or stop-loss coverage.

Employers captives, Travis Grulkowski, Troy Filipek

According to gpoaccess.gov, federal tax expenditures on employer-sponsored healthcare plans are expected to be approximately $185 billion in federal fiscal year (FFY) 2012. That value represents forgone federal taxes on the medical insurance premiums paid by employers and medical benefit claims incurred by their employees in these plans.  (There are corresponding multi-billion dollar federal tax expenditures for other types of employer-sponsored plans.)

Whether Congress will introduce legislation to explore reducing the favorable tax status of these employer plans as a new source of tax revenue for the federal government is speculation; but the idea should not be surprising in this age of our multi-trillion dollar federal deficit. (State governments could also follow suit.)

But let’s assume for the moment that Congress makes no attempt at eliminating the tax subsidy for employers (while we acknowledge that the impact of the 2014 exchanges is still quite uncertain) and employer-sponsored insurance (ESI) continues. There could still be an opportunity for newfound federal tax revenue that has yet to be considered, as follows.

Under the health reform law, employers will be required to report the annual “value” of employer healthcare benefits on Form W-2. Employees should see it on the tax year 2012 Form W-2 in January 2013. Congress could introduce legislation  that would require this value to be taxed as ordinary personal income as part of the tax year 2012 Form 1040, permanently ending a genuine “tax-free” benefit. (Contrast this to the benefits paid from employer pension plans, which are “tax-deferred.”)

Let’s call this new taxable income the PPACA stealth income. It could result in a severe financial hardship for an employee, who would need to come up with enough money to pay for the additional tax liability generated by this “income.” Perhaps Congress could also view this value as taxable for Social Security taxes. U.S. taxpayers could wind up under-withheld for personal taxes and possibly fined for it. There are a myriad of other issues that could be listed, but would violate the spirit of a brief blog entry.

What do you think?

Employers Charles Clark, taxes

A new Client Action Bulletin looks at the final rule from the Equal Employment Opportunity Commission (EEOC) that provides an expansive definition of “disability.” The final rule, which covers only the Americans with Disabilities Act’s employment-based requirements enforced by the EEOC, is effective May 24. Read the Bulletin here.

Employers disability

We’ve looked before at the question of what employers that provide healthcare plans to their employees are likely to do: Keep providing coverage or opt out and drive their employees toward plans in the state insurance exchange?

This graphic provides perspective on how different slices of the employee population may be better candidates for exchange plans than others.

This article dives deeper into the issue.

Employers, Reform employers, Paul Houchens, state exchanges

The Milwaukee Journal Sentinel looks at the choice facing employers: Do we continue providing coverage to employees? Or do we drop coverage, pay the penalty, and let employees buy insurance through one of the exchanges due to come online in 2014?

While the back-of-the-napkin cost/benefit analysis may point to a clear financial incentive for dropping coverage, the Sentinel article finds something else brewing. Here is an excerpt:

Nothing requires employers to provide health benefits now – there’s not even a penalty. Companies provide benefits to compete for the workers they need to make money.

“That hasn’t changed,” said Scott Weltz, an actuary with Milliman, an actuarial and consulting firm…Some employers, particularly those with low-wage workers, will want to look at the alternatives…But once they do, they often conclude that they want to continue offering benefits for now.

The full article (which is a thorough analysis of the question) is available here.

Employers, Reform employer, Scott Weltz, state exchanges

Plan Sponsor picks up on a central question for employers who sponsor their own healthcare plans:

Should employees get their healthcare through us, the employer, or should we help them get it through the state insurance exchange?

This excerpt captures the challenge of the question at hand:

Employers need to ask themselves, “How do we attract and retain employees?” [Milliman consultant Jeff] Chanin says. “They need to start trying to project their costs from 2014 to 2020, and compare the post-tax differential in offering health insurance or not, or some intermediate option.” He thinks of a high-deductible plan with moderate to high employee deductibles as an intermediate option, for example, and he suggests surveying employees to understand how much they value their health-care plan.

Most employers likely will not make a final decision until they see how effectively the exchanges get up and running, Chanin predicts. Like some others, he thinks that, if a couple of well-regarded major employers switch people to the exchanges, others will follow in a domino effect. “The exchanges, if they work, will essentially compete with employer programs,” he says.

“If they work” is of course a key question for the state health insurance exchanges. Click here for a helpful library of information that illustrates what “working” means.

Employers Jeff Chanin, large employers, state exchanges

Employers who are looking for a clear, succinct explanation of how the Patient Protection and Affordable Care Act may affect them can now turn to this paper by Jeff Chanin, Roscoe Haynes, and Paul Bonsee.

Many of the concepts were previously communicated in Jeff’s more robust paper, available here.

Employers, Reform Jeff Chanin, Paul Bonsee, Roscoe Haynes