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by Leila Morris, June 20, 2012
• Bill To Regulate LTC Premiums Moves Through Legislature
• California RNs To Be Out in Force As Court Ruling Looms
• How Consumer Driven Health Care Plans Reduce Costs
• Many Employers Don’t Understand Health Reform
• 2012 Sees A Jump in the Denial of Health Claims
• Health Reform Brings Coverage to Uninsured Young Adults
• Employers Plan to Switch to Defined Contribution Plans
• Life Insurance
• Variable Annuity
• Indexed Universal Life
• Deferred Compensation Plans See Record Popularity
• Secrets to Effective Lobbying
• NAHU to Meet in Vegas Next Week
• Health and Human Services Podcast Series
• 401(k) Webinar
Bill To Regulate LTC Premiums Moves Through Legislature
• Prevent insurers from passing poor investment returns through to taxpayers.
• Eliminate the practice of insurers cherry-picking a small group of policies to justify large rate increases.
• Prohibit insurers from using a loss ratio that is a moving target to justify raising rates merely to make a profit.
• Require insurers to allow consumers to view policy language before purchasing the policy.
The bill, which was sponsored by Commissioner Jones and the California Department of Insurance, now moves to the Senate Committee on Appropriations for consideration.
Commissioner Jones said, “Perhaps the most urgent issue facing senior consumers is the rising cost of long-term care insurance. This bill will curb a troubling trend in the number and size of long-term care rate increases. Without this legislation, consumers, many on fixed incomes, will continue to face uncertainty, never knowing what rates to expect from year to year.”
LTC insurance was first sold in California in the early 1980s. Since it was a new product, insurers had no historical experience upon which to rely when setting initial premium rates. As a result, pricing of LTC policies was often based on what were later found to be inaccurate assumptions. As insurers gained more experience in the market, premium rates increased to compensate for those initial inaccuracies. In 2000, the Legislature passed SB 898 to stabilize escalating rates. However, the rate stabilization features passed years before aren’t completely restoring predictability as intended to the long-term care insurance market.
California RNs To Be Out in Force As Court Ruling Looms
As the nation awaits the Supreme Court’s decision on health reform, nurses, physicians, and healthcare activists began a three-week tour of the state. They want to remind the public that the healthcare crisis continues to worsen and genuine, comprehensive reform is still needed. Beginning in San Diego June 19 and ending on July 12 in Anaheim, the Medicare for All tour crisscrosses the state with stops in nearly two dozen sites. At almost every stop, nurses and doctors will provide basic medical screenings beginning at 3 p.m. to be followed by a public town hall meeting at 6:30 at which people will be encouraged to share their personal experiences. Discussion will also be held about what’s next on healthcare after the Supreme Court decision.
The focus of the events is a call to step up the drive for guaranteed, universal, cost-effective health reform once and for all by expanding and updating Medicare to cover everyone regardless of age. “We have a proven solution with a model that works wonderfully well for 40 million Americans already. It’s called ‘Medicare.’ No one should have to wait until they turn 65 to be assured they will be able to receive the healthcare they need,” said Zenei Cortez, RN, co-president of the California Nurses. If the health reform law is struck down, California stands to lose billions in federal funding. See the full schedule of the tour, visit at http://www.nationalnursesunited.org/blog/entry/all-aboard-the-healthcare-express.
How Consumer Driven Health Care Plans Reduce Costs
Consumers who moved from a traditional health plan to consumer driven health plan (CDHP) were able to reduce their health care spending significantly. They also increased their use of preventive care, according to a study by Health Care Service Corp. (HCSC). HCSC operates Blue Cross and Blue Shield Plans in Il, Texas, Okla. and N.M.
The CDHP program, BlueEdge, is offered through the four Blue Cross and Blue Shield Plans and includes health savings account (HSA) and health reimbursement account (HRA) options. The study reveals the following about members who went from a traditional plan to a CDHP:
• They were 4% more likely to get preventive services.
• They reduced health care utilization more than 12%.
• They were 10% more likely to fill prescriptions with generics.
• They spent 24% less on in-patient hospital services and 8% less on out-patient services.
• They had a 12% decrease in emergency room visits.
• They reduced combined medical and pharmacy spending by 11%
Employers that offered only a CDHP saw even greater spending reductions up to 14.4% over the three years after moving from a traditional plan to a CDHP. For more information, visit www.HCSC.com.
Many Employers Don’t Understand Health Reform
Many human resource professionals and benefit decision makers at companies of all sizes are not confident that their organizations understand their new responsibilities under the requirements of the Affordable Care Act (ACA). Also, preparedness for key upcoming ACA regulations varies greatly across different sized companies.
ADP recently surveyed more than 800 human resource and benefit decision makers to gauge employers’ attitudes and behaviors about the future of health care benefits in general and impending ACA regulations.
Sixty-four percent of benefit decision makers at small businesses (on to 49 employees) say the U.S. health care landscape is going through profound change as do 52% of decision makers at midsized companies (50-999 employees) and large (1000+ employees) organizations.
Jan Siegmund, chief strategy officer of ADP said that half or more of small and midsized companies are not prepared to meet the newly-required summary of benefits and coverage required by the ACA. Just 40% of respondents from large organizations are very confident about their understanding of employer requirements under the ACA while even fewer respondents in small companies (20%) and midsized companies (17%) expressed that same level of confidence.
Moreover, 67% of human resource and benefit decision makers at small companies were unaware of the upcoming employee notification requirement about public exchanges as were 62% of those at midsized companies and 32% of those at large organizations.
Sixty-six percent of large companies are ready to provide the newly required summary of benefits and coverage as are 50% of midsized companies and just 31% of small businesses. For more information, visit: http://www.adp.com/pdf/KeyFindingsShiftingUSHealthcareLandscape.pdf
2012 Sees a Jump in the Denial of Health Claims
The denial rate for private health insurers went from 2.10% in 2011 to 3.48% in 2012, an increase of nearly 69%, according to a study by the American Medical Assn. (AMA). Every private health insurer that AMA surveyed, except for Humana, increased denials this year. The survey reveals the following about carriers:
Percentage of claims denied 2011 — 3.62%, 2012 — 5.07%
Reasons for denial in 2012:
- 24% Service/equipment/drug is not covered under the patient’s current benefit plan.
- 20% Claim/service lacks information need for application.
- 11% Non-covered charge.
Percentage of claims denied 2011 — 1.38%, 2012 — 4%
Reasons for denial in 2012:
- 35% Non-covered charge
- 14% The procedure is deemed experimental/investigational
- 7% The pre-certification/authorization is absent
Percentage of claims denied: 2011 — 2.73%, 2012 — 3.78%
Top three reasons for denials in 2012:
- 25% Claim service lacks information needed for adjudication.
- 14% Patient is enrolled in a hospice
- 13% These are non-covered services because this is not deemed a medical necessity by the payer.
Percentage of claims denied 2011 — 2.33%, 2012 — 1.97%
- 22% Non-covered charges.
- 20% Referral absent or exceeded.
- 16% Claim/service lacks information needed for adjudication
Percentage of claims denied: 2011 — 1.05%. 2012 — 1.71%
Top three reasons for denials in 2012:
- 12% Non-covered Charge
- 9% These are non-covered services because this is a routine or screening procedure done in conjunction with a routine exam.
- 6% Precertification/authorization absent.
Percentage of claims denied: 2011 — 0.68%, 2012 — 1.39%
Top three reasons for denials in 2012:
- 42% Non-covered charges.
- 23% Plan procedures not followed.
- 8% Precertification/authorization absent
The survey also reveals that as many as 4.7% of all claims required prior authorization from a commercial health insurer in 2012 — a 23% increase since last year. The AMA estimates that burdensome prior authorization policies will add $728 million in unnecessary administrative costs to the health system in 2012. The AMA calls for replacing the largely manual process with an automated decision support system that will enhance patient care and reduce paperwork costs.
The study also reveals that carriers dropped error rates on paid medical claims from 19.3% in 2011 to 9.5% in 2012. This improvement resulted in $8 billion in health system savings beause less unnecessary administrative work was needed to reconcile errors. While the carriers made dramatic improvements in claims accuracy this year, the commercial health insurance industry still paid the wrong amount for nearly one in 10 medical claims. The AMA estimates an additional $7 billion could be saved if insurers improved accuracy further.
Private insurers have improved response times to medical claims by 17% from 2008 to 2012. Health insurers have increased the transparency of rules used to edit medical claims by 33% from 2008 to 2012. Reducing the use of undisclosed proprietary edits unlocks the flow of transparent information to physicians and reduces the administrative costs of reconciling medical claims, says the AMA. For more information, visit http://www.ama-assn.org/ama/pub/physician.
Health Reform Brings Coverage to Uninsured Young Adults
New health care law helps more young adults get and keep health coverage
A report by the Dept. of Health and Human Services (HHS) reveals that 3.1 million young adults have gained health insurance because of the health care law. As a result of the law, the proportion of insured adults ages 19 through 25 has increased to nearly 75%.
The Affordable Care Act requires insurers to allow young adults to remain on their parents’ family plans until their 26th birthday, even if they move away from home or graduate from school. This policy took effect on September 23, 2010. Before the Affordable Care Act, young adults were the age group least likely to have health insurance. Some lost coverage when they became too old to qualify as a dependent on their parents’ plans and others lost coverage as they graduated from school or changed jobs. HHS Secretary Kathleen Sebelius said that, starting in 2014, there will be even more health coverage options available to young adults when Affordable Insurance Exchanges, premium tax credits, and the Medicaid expansion go into effect. For more information, visit www.hhs.gov.
Employers Plans to Switch to Defined Contribution Plans
Forty-seven percent of employers surveyed by J.D. Power and Associates will definitely or probably switch to a defined contribution model within a private exchange, allowing employees to select the coverage that best fits their needs. In an earlier study, 42% of employees with employer-sponsored coverage expressed interest in the defined contribution model as well.
Only 13% of fully insured employers and 14% of self-funded employers will definitely not or probably not continue to sponsor employee coverage. Rick Millard, senior director of the healthcare practice at J.D. Power and Associates said, “While some reports have predicted that a large number of employers might stop offering coverage, study findings indicate that a large majority won’t walk away from offering coverage to their employees.”
Cost is still a primary concern for employers and employees and has a greater impact on choosing a health plan than on the actual service experience. Employers view fees charged by doctors and hospitals as the top reason for high healthcare costs while they view health insurance companies’ marketing or administrative costs as the primary reason.
The survey also looked at employer satisfaction with fully insured plans. Kaiser ranks highest in employer satisfaction with a score of 716 (on a 1,000-point scale). Kaiser performs particularly well in account servicing, problem resolution, program offerings, cost and employee plan service experience. Aetna ranks highest in employer satisfaction Among self-funded plans, achieving a score of 680 and performs particularly well in account servicing.
The 2012 Employer Health Plan Study is based on responses from 6,579 employers, with quotas to assure an adequate distribution of small, medium and large companies. The study was fielded between April and May 2012. For more information, visit http://www.jdpower.com.
American General enhanced its web-based life insurance application tool. It allows producers to submit applications electronically and ensures fast turnaround times for the interview, exam, and submission of the full application. Enhancements include status notifications and the ability to submit replacements. For more information, call 800-677-3311.
Aetna’s work life platform “Aetna Resources For Living” has been combined with the Consult A Doctor 24/7 telemedicine service to provide easier access to resources that help improve employees’ health, work/life balance and workplace productivity. Members get the following services:
• Confidential 24/7 phone consultation and prescription-writing.
• Access to Aetna Resources for Living work life resources and support.
• Patient advocacy bill review/mediation.
• Access to online wellness tools and health records.
• Legal and financial consulting.
For more information, visit www.CADRPlus.com.
Symetra Life is offering two DoubleLine Capital LP sub-advised funds in a tax-deferred variable annuity exclusively through the Symetra True Variable Annuity. DoubleLine will provide total return and emerging markets income strategies as sub-adviser to two funds of the Symetra Mutual Funds Trust. Earlier, Symetra Life unveiled a variable annuity designed for clients of fee-based and fee-only financial advisers who want low fees, tax deferral and premier investment choices. For more information, visit www.symetra.com.
Indexed Universal Life
Nationwide is offering the Nationwide “YourLife Indexed UL,” a fixed life product with permanent death benefit protection. It now offers an annual point-to-point interest crediting strategy in addition to its existing monthly average and fixed option. For more information, visit www.nationwide.com/IUL.
Deferred Compensation Plans See Record Popularity
Employer sponsorship of non-qualified deferred compensation plans reached an all-time high of nearly 94% according to the “MullinTBG” executive benefit survey. Plan sponsors view non-qualified deferred compensation plans (NQDCPs) as an essential component of an executive benefit package, according to the survey. NQDCPs are company-sponsored savings plans that enable highly compensated employees to defer more pre-tax compensation than 401(k) plans and reduce their taxable income. Income taxes on investment returns are also deferred until plan benefits are distributed. NQDCP balances are subject to the employer’s creditors in the event of bankruptcy, making them particularly effective at ensuring executives have a personal vested interest in a company’s financial success.
Most plans offer 11 to 20 investment options. An increasing number of companies are offering financial planning benefits to executives. Nearly 45% of companies offered this benefit in 2011, demonstrating that plan sponsors recognize the need to help participants meet their retirement savings goals by providing access to expert advice and guidance.
Retirement confidence remains at near-record lows and executive compensation continues to be the subject of public and policymaker scrutiny. But NQDCPs have fared remarkably well throughout the financial crisis and uneven economic recovery of the past four years. Plan participation remained steady at 46.4% of the eligible population, with the highest levels of participation (58.0%) seen in informally funded plans that offer a company match.
For the first time, respondents were asked to describe their criteria for determining plan eligibility. Title (24.6%) and job grade (23.0%) emerged as the most prevalent criteria for determining eligibility.
Eighty-seven percent of plan sponsors don’t plan to maked changes to their NQDCPs in 2012. Further, additions or enhancements in distribution and investment options were the top priorities for sponsors who are considering plan changes in the coming year.
George Castineiras, senior vice president of Total Retirement Solutions said, “Plan changes that include benefit enhancements like the strengthening of distribution and investment offerings are a positive sign. Plan sponsors’ willingness to embrace the built-in flexibility of non-qualified plan design to offer a more robust benefit further supports the prevailing belief that NQDCPs are a valuable and appreciated benefit.”
As the economy continues to improve and executives begin to rebuild savings lost during the financial turmoil of the past few years, more NQDCP participants are re-allocating their savings to market-based investments from more conservative fixed-rate options. The shift may signal renewed investor confidence in the markets and the economic recovery.
Plans offer a variety of fixed-rate options. “Even though more participants are moving to market-based investments, fixed-rate alternatives are still smart choices for plan sponsors to include as part of a well-rounded investment line-up. And during the past few years, we have seen an increase in the number of companies offering fixed-rate options in their non-qualified plans to help executives manage market volatility,” Castineiras said.
Other highlights from the survey include the following:
• Companies continue to reduce or eliminate traditional defined benefit pension and cash balance plans.
• Of the 44.7% of companies providing a company match, most calculate according to a fixed percentage or to replace a lost 401(k) match.
• More than half of companies fund their NQDCPs informally. It has become more popular to use mutual funds or corporate-owned life insurance (COLI) as primary informal funding vehicles. Once again, respondents ranked managing NQDCP asset-to-liability ratios and improving employee benefit security as their top reasons for funding their plans informally.
• Rabbi trusts remain the security vehicle of choice, employed by 80.3% of all respondents.
• Ninety-two percent of companies rely exclusively or partly on a third-party recordkeeper to administer their NQDCPs. For more information, visit www.mullintbg.com.
Secrets to Effective Lobbying
When it comes to lobbying, there is more than money and power. George Washington University surveyed nearly 3,000 congressional staff and D.C., lobbyists to find out what works in gaining access to members of Congress. David Rehr in the Graduate School of Political Management (GSPM) said, “It appears that money and a powerful lobbying brand name matter less to members of Congress and their staff than providing reliable, consistent information.”
The following are most important determinants gaining access:
• 45% providing credible, reliable information.
• 28% having an existing relationship among member/staff/lobbyists.
• 12% the reputation of person seeking the meeting.
• 11% the person has worked for the legislator.
• 2% a reputation as a powerful lobby.
• 2% whether PAC has supported the member.
Ninety-five percent of congressional staff members say that political bias in the media influences decision-making in Congress. Seventy-five percent of Republican Hill staff member say there is a lot of bias compared to 53% of
Democratic staff. Forty-one percent of Democratic staff says there is some bias compared to 24% of Republicans. Forty-four percent of lobbyists are self-identified members of the Democratic party; 30 percent are Republicans; and 26% are independent or non-affiliated.
According to congressional staff, 78% of lobbyists have at least a moderate influence with members of Congress and their staff. Only 1% says they have no influence at all.
NAHU to Meet in Vegas Next Week
The National Association of Health Underwriters (NAHU) is holding its annual convention in Las Vegas June 24 to 27. It will focus on training health insurance professionals on how to adapt to the healthcare industry post-PPACA. For more information, visit http://www.nahu.org.
Health and Human Services Podcast Series
MAXIMUS, a provider of government services worldwide, launched a podcast series that focuses on government health and human services programs. For more information, visit www.maximus.com.
A web seminar on Department of Labor and IRS Investigations of 401(k) and 403(b) Plans will be held on July 24 by the New England Employee Benefits Council (NEEBC). For more information, visit www.neebc.org.