Law and Executive Order: A look at how President Trump’s executive order on healthcare impacts the ACA’s small group and individual markets

The Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States, signed by President Trump on October 12th,  could have a significant effect on both the individual and small group health insurance markets. The extent of any impact on either market will vary depending on how the executive order is interpreted and implemented by administrative agencies as well as whether those interpretations hold up to legal challenges.

This article by Milliman consultants Fritz Busch, Erik Huth, Nicholas Krienke, and Jason Karcher summarizes the executive order and analyzes key considerations and potential impacts for commercial health plans.

Nonquantitative treatment limitations in the spotlight

Nonquantitative treatment limitations (NQTLs) continue to be a source of difficulty for many health plans in attaining compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Now that a few years have passed since the implementation of the final rules, we can see examples of MHPAEA enforcement related to NQTLs and the types of NQTLs being investigated and settled. In this paper, Milliman consultants provide perspective.

What actuarial skills are important to the NHS?

Actuarial skills are immensely relevant in regional National Health Service (NHS) environments and can be used to inform the design of risk-based accountable care system (ACS) contracts. An article in The Actuary by Milliman’s Joanne Buckle and Tanya Hayward highlights their recent experience helping to develop an ACS within a sub-segment of the NHS encompassing a small number of clinical commissioning groups and local councils.

Individual disability income (IDI) companies see jump in combined new sales after market shake-up, according to Milliman report

Milliman has released the results of its latest Individual Disability Income (IDI) Market Survey. The report, in its tenth edition, measures sales trends across 14 IDI companies, representing 90% of the market. The survey also covers recent changes in underwriting and products, the range of views that companies have on the current profitability of their business, and the favorable and unfavorable trends that can affect the long-term profitability of the IDI market. New this year, the report also includes a section discussing companies’ progress implementing the new 2013 Valuation Table.

Key findings include:

• Combined IDI new premium from the 14 IDI companies increased in 2016 by 1.3%, compared to 5.7% in 2015. Combined IDI new premium year-to-date through June 30, 2017 increased by 9.0% over the prior year.
• New premium from the employer-sponsored multi-life market exceeded 43% of total IDI new premium in 2015 and 2016.
• There is continued stability in the share of new IDI premium from doctors.
• The share of new IDI premium issued using voluntary guaranteed standard issue (GSI) underwriting was 32-34% in 2015 and 2016.

The decision of a major player to exit the individually-sold IDI market this past year appears to be benefitting other IDI companies in 2017, as they take on a portion of those sales. We believe this is a short-term impact. In the longer term, overall IDI market growth may be constrained by the loss of one of the larger writers of IDI business.

To download the full IDI Market Survey, click here.

Considerations for comparing 30-day unplanned readmission rates

Hospital readmissions can add unnecessary cost to the healthcare system and can adversely affect patient health. Readmission rates are key metrics for measuring the performance of hospitals, health plans, accountable care organizations, physicians, and post-acute care facilities because they are tied to financial rewards and penalties for those entities. This article by Milliman consultants Maggie Alston and Michele Berrios identifies key elements that should be considered when evaluating readmission rates across populations or when comparing readmission rates with different methodologies.

Questions and answers: Are you managing retiree health needs cost-effectively?

Because retirees are often the highest users of healthcare, simple changes in plan design or delivery can go a long way in reducing costs for employers. For example, we had a client that was looking to deliver benefits to its Medicare retirees more efficiently. By moving the entire population to a Medicare Advantage plan, our client not only reduced its retiree medical costs by 10% in the first year due to a reduced premium, but it also was able to provide a richer benefit design.

In reviewing your own retiree medical benefit design strategy, here are a few questions you should ask.

Is my plan coordinating with Medicare in the most efficient way?
If you have an active medical plan that also covers Medicare-eligible retirees, carefully review the coordination of benefits method. When Medicare is primary, the plan commonly coordinates under one of these approaches: carve-out, maintenance of benefits, or coordination of benefits. Because costs to the plan and retiree vary under each of these approaches it is a good idea to examine each one; there may be a way to save money for the plan or the retiree.

Am I taking full advantage of prescription drug subsidies?
Given the high use of prescription drugs in the retiree population, this area may be your best opportunity to reduce costs. Are you taking full advantage of the prescription drug subsidies from the Centers for Medicare and Medicaid Services (CMS)? Consider delivering Medicare prescription drug coverage through an employer group waiver plan or with retiree drug subsidy coverage.

Am I leveraging the experts in administration?
Some companies have moved Medicare-eligible retirees to a Medicare Advantage Prescription Drug Plan (MAPDP), which offers additional benefits beyond Part A and Part B coverage. The federal government pays private insurance companies to offer these plans. Because MAPDPs are fully insured, the insurer would take over the entire administration of the Medicare plan and is well-versed in managing this population, resulting in possible savings and increased efficiencies in plan administration.

Does a pre-Medicare plan make sense?
If the size of your pre-Medicare retiree population is large enough, the most cost-effective solution could be to offer a pre-Medicare retiree-only plan. Retiree populations are different and a pre-Medicare retiree-only plan can be designed with those needs in mind, in a way that efficiently maximizes benefits. For example, retirees are generally on fixed incomes, so a plan designed with set deductibles, copayments, and out-of-pocket maximums is more desirable.

Am I using all the utilization management tools available?
Utilization management programs can be helpful in reducing the cost of covering pre-Medicare retirees. For example, chronic diseases are likely more prevalent in your pre-Medicare retirees than your actives. Helping retirees manage these conditions can benefit not just your covered population but also your bottom line.

Do any of the plan changes that I am making have unintended consequences for my retiree population?
Seemingly small changes can have significant financial impacts for your organization when you look closely at how it affects your retirees—even though retirees likely make up a smaller portion of your total population. For example, for plans that receive the retiree drug subsidy, changes that increase cost sharing or contributions for prescription drugs for retirees may cause the plan to lose eligibility for the subsidy. Instead of cost-shifting, it may make more sense to focus on managing plan costs. You will have the added advantage of possibly lowering retiree medical accounting liabilities—e.g., Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 715-60 liability—by potentially reducing projected plan costs, long-term trend, and delaying the impact of the 40% excise tax on high-cost health plans.

When it comes to retiree medical coverage, it is important to ask the right questions. Given the increasing cost of healthcare and retirees’ high utilization, you may be able to make changes that positively affect your retirees and lower the cost of covering them.