Employers Are Delaying Health Plan Renewals


by Leila Morris – In 2014, 32% of employers are delaying their health plan renewal date to December 2014 to avoid rate increases, according to a survey by United Benefit Advisors (UBA). NIntety-four percent of the employers that are delaying the renewal date are small businesses in the under 100-employee market.

In states that don’t allow renewal of pre-ACA plans, many small employers are facing rate increases of 30% to 160%. Benefit advisor, Carol Taylor, said, “We’re seeing little change in premium rates and employee benefit plans, and that’s because many employers renewed twice in 2013 to delay the effects of ACA. In the category of employers with 50 or fewer employees, the results are staggering; in 2012, there were 507 employers with a December 1 renewal date. In December 2013, that number was over five times (412.4%) higher at 2,598 employers. This is going to have a ripple effect for years to come in the small group market.” “This trend shows, overwhelmingly, that the full impact of ACA compliance and its effect on health insurance costs is still unknown, but paints a gray picture of what’s ahead for employers,” says Les McPhearson, CEO of UBA.

Employers have seen modest cost increases in recent years. The average annual cost per employee was $9,302 in 2013 versus $9,504 in 2014. But employers are pushing more of the burden onto employees through out-of-pocket cost increases and reductions in family benefits. While average in-network deductibles remained fairly level at $1,901, out-of-pocket maximums increased more than 6% in 2014. The median single out-of-pocket maximum increased $500 to $3,500. Median family out-of-pocket maximum increased $1,000 to $8,000. The increase in medians was more than double the increase in average out-of-pocket maximums for both single and family, which went up less than $250. Taylor said, “If you were to look only at the average out-of-pocket costs and deductibles, you’d be missing a big part of the story. The median numbers show a significant increase because the lower end of the scale is dropping off, so we’re getting used to a new norm in higher out-of-pocket costs.”

The survey also found the following:

  • In 2013, 21% of plans had no deductible in-network for an individual compared to 20% in 2014. Also, 22.5% of plans had no deductible in-network for for a family compared to 20.8% in 2014.
  • In 2013, 8% of plans had no out-of-network deductible for individuals compared to 6.9% in 2014. Also 9.8% of plans had no out-of-network deductible for a family in 2013 compared to to 8.1% in 2014.
  • Plans with 100% coinsurance are also disappearing rapidly, having decreased by 14.8% since 2012.
  • Average annual cost per employee in the West is 9,513 per employee.

For more information, visit www.UBAbenefits.com.

Spending Is Up While Utilization is Down for the Privately Insured

Privately insured Americans used fewer medical services in 2013, but spent more on these services, according a report by the Health Care Cost Institute. There was a 3.9% increase in spending for enrollees of employer health plans, continuing the moderate growth trend that began in 2010. “Price growth for medical services and brand name drugs remained strong in 2013. Health spending grew moderately, but that was only because consumers used fewer services,” said HCCI Executive Director David Newman.

Spending averaged $4,864 per enrollee in 2013, up $183 from the year before. Out-of-pocket costs remained stable including co-payments and deductibles. In 2013, there was a decline in the use of brand prescription drugs, inpatient admissions, and outpatient services. Yet average prices increased for all three categories, and at higher rates than in 2012. Acute inpatient hospital admissions fell 2.3% while prices rose 6.7%, causing inpatient spending to rise 3.8%. The average price per-admission grew by $1,101, in 2013 to $18,030. Outpatient visits declined 0.8% while prices rose 6.4%. Total outpatient visit spending grew 5.5%.

The use of brand name prescriptions (filled days per 1,000 insureds) dropped 15.5% while the average price per filled day grew more than 21.2%. Total spending on brand name drugs grew 2.4%. The use of professional services grew in 2013, including office visits and lab tests. The use of generic prescriptions grew 4.5%. Preventive visits to primary care physicians and contraceptive hormone use both rose 5%. Antidepressants dominated generic prescription drug use, accounting for over 10% of all generic drugs used in 2013.

In 2013, consumers spent an average of $800 out-of-pocket — a 4% increase over 2012. Women 19 to 25 spent an average of $662 out-of-pocket — the same as the year before. This was almost completely due to a drop in out-of-pocket spending on generic and brand hormone contraceptives. Hormone contraceptives are generally covered without cost sharing, a provision of the Affordable Care Act that went into effect January 1, 2013. “This is the first time we have seen flat out-of-pocket spending growth by any group of the privately insured,” said HCCI Senior Researcher Amanda Frost.

In 2013, out-of-pocket spending for medical services went up (especially for acute inpatient admissions), but went down for brand and generic prescriptions. In 2013, women 19 to 54 used more outpatient and professional services compared to men. But after 54, the gender gap narrowed, as mens’ use of radiology, laboratory, and pathology services increased.

Adults 19 to 25 visited the ER more often than did adults 55 to 64. However, older adults had a higher average price for their visits, due partially to use of more intensive care. Spending on ER visits averaged $314 per capita for older adults, compared to $310 for young adults.

Anti-depressants account for 10% of generic drug use. In fact, anti-depressants were the most commonly filled class of CNS generic prescriptions and the most used generic drug class for young men, intermediate men, middle age women, and pre-Medicare women. For more information, visit www.healthcostinstitute.org.

Free Broadcasts From Medicare Supplement Conference

Insurance agents who market to Medicare-eligible prospects are invited to watch a live broadcast from the 2015 National Medicare Supplement Insurance Sales Summit. The live online webcast will stream from the seventh national Medigap conference in Orlando on April 14. Pre-registration is required for the free broadcast, and space is limited. For more information, visit www.InsuranceExpos.com.

Hospital-Owned Physician Organizations Incur Higher Costs

Hospital-owned physician organizations had higher expenditures for professional, hospital, laboratory, pharmaceutical, and ancillary services for patients in commercial HMOs compared to for patients in physician-owned organizations. The study, published in the Journal of the American Medical Assn., was conducted from 2009 to 2012. Organizations owned by multi-hospital systems incurred 19.8% higher expenditures compated to physician-owned organizations. The largest physician organizations incurred 9.2% higher expenditures per patient than did the smallest organizations. Hospitals are rapidly acquiring medical groups and physician practices. This consolidation could foster cooperation and reduce expenditures. But it could also lead to higher expenditures through greater use of hospital-based ambulatory services and that fact that hospitals will have more pricing leverage against health insurers. Local hospital–owned physician organizations incurred 10.3% higher expenditures per patient than did physician-owned organizations. For more information, visit http://jama.jamanetwork.com/article.aspx?articleid=1917439

Medicare Advantage Plans in 2015

MedicareAdvantage plans with the top performance ratings (four stars or higher) and lowest out-of-pocket costs can be found in 52% of geographic markets, according to a study by HealthMetrix Research. In California, Blue Cross Blue Shield affiliates in Ventura County (CA) meet these optimal criteria. For more information, visit www.MedicareNewsWatch.com

Understanding Special Enrollment Periods

Health Partners America is offering a free white paper to help insurance agents and employers advise clients about qualifying events. To get it, visit http://healthpartnersamerica.com/understanding-special-enrollment-periods.

Many Americans Don’t Ask Basic Questions Before Choosing a Plan

Three out of four Americans say they understand health insurance. But 42% say they are somewhat likely or not at all likely to review plan details before signing up for coverage, according to a survey by the American Institutes for Research (AIR).  “Because many people believe they know more than they actually do about health insurance,…they may face the shock of high out-of-pocket expenses they didn’t expect,” said Kathryn A. Paez, Ph.D., R.N., an AIR principal researcher, and coauthor of the study. The survey reveals the following:

  • About half can identify general characteristics of an HMO, and 23% can identify the characteristics of a PPO.
  • While most can identify common insurance terms, such as “appeal” (80%) and “premium” (81%), far fewer can identify more complicated concepts, such as “step therapy” (37%) or “medically necessary” (60%).
  • Only 20% can calculate how much they would owe for a routine doctor’s visit.
  • Seventy-nine percent are at least moderately likely to check which hospitals and physicians are covered by various plans.
  • Those aged 22 to 34 answered 55% of the knowledge and skills items on the survey correctly, compared to 63% of 55- to 64-year olds.
  • People who have not seen a doctor in the past year answered 49% of the knowledge and skills questions correctly compared to 64% of those who see a doctor several times a year.

For more information, visit www.air.org.

Health Is the Number One Reason Canadians Delay Retirement

Sixty-nine percent of retired Canadians did not stop working on the date they planned. “Our research shows that Canadians who are not financially prepared to retire typically say they will work longer to compensate, but unfortunately, they may not have that choice,” says Kevin Dougherty, president, Sun Life Financial Canada. Though Sixty-six percent of Canadians cite that deteriorating health is a top concern as they age, only 22% have saved money or planned for healthcare expenses in retirement. The survey also reveals the following:

  • 53% worry about the cost of drugs and medical treatments in retirement.
  • 47% worry about being in long-term care longer than they are financially prepared for.
  • 45% worry about outliving their retirement savings.

For more information, visit www.sunlife.ca/CanadianHealthIndex.


Employees Say Traditional Open Enrollment is a Waste of Time 

Fifty-six percent of American employees with workplace benefits say that the traditional, paper-driven open enrollment process is a waste of time. Seventy percent say that it would be better to do enrollment through an online exchange, according to a study by PlanSource. Sixty-seven percent of employees have to take time out of their work day researching and enrolling in their employer’s plan during open enrollment, resulting in millions of hours of lost productivity. Fifty-five percent of employees who consider the traditional open enrollment process to be a time-wasting experience say sorting through all the options is confusing.

Employees also have these complaints about open enrollment:

  • 32% say it requires too much research.
  • 31% say the forms are hard to fill out.
  • 29% say it takes too long to get confirmation of selections and coverage.
  • 20% say they got confusing information about their benefit choices.
  • 18% say there are too many forms to fill out.
  • 17% say there aren’t enough choices in the benefit plan.
  • 12% had a hard time navigating the online enrollment system.

Employees have these top considerations during open enrollment:

  • 44% choosing an affordable healthcare plan.
  • 37% staying healthy for their family.
  • 37% preparing for a medical emergency or disability.
  • 25% ensuring their family’s financial well being after their or their partner’s death.
  • 8% getting ready for a new family member.


Dental Plan Members Are Not Getting Their Check ups

More than one-fourth of adults with dental insurance don’t take full advantage of their preventive care benefits, according to a survey by Cigna. Typical dental plans cover preventive checkups every six months, but too many people are staying away from the dentist because they fear the costs or they fear painful procedures. Some assume that they don’t need more frequent check ups because their teeth don’t hurt.

Cigna Dental’s chief clinical director, Miles Hall, DDS, said, “There appears to be some confusion about what is preventive care versus treatment. Those who are unsure should ask their dentist or insurer about the specifics of their plan. Dental offices continue to make technological advances in equipment and treatments so that procedures often take less time and [come] with less discomfort. Don’t let a past poor experience prevent you from having a healthy mouth.” Those who had one dental exam during the year are nearly twice as likely to report very good or excellent oral health. Four out of five parents and guardians who did not get a dental exam during the year took their children at least once. Fifty-three percent say their medical health is a critical priority while only 33% say their oral health is a critical priority. People whose  primary care physician discusses the importance of oral health with them are 50% more likely to go to the dentist at least once a year. For more information, visit www.Cigna.com/dental-resources.


Anthem Reduces Rate Increase

Anthem Blue Cross of California adjusted its average 9.8% rate increase down to around 8% on its small group health insurance policies. Department of Insurance Commissioner Dave Jones says that the 8% rate increase is still excessive and unreasonable. He says that only a 2.1% rate increase is justifiable based on Anthem’s claims experience and other data provided by the company.

Anthem Partners with Seven LA & Health Systems 

Anthem Blue Cross and seven top hospital systems have partnered to offer Anthem Blue Cross Vivity, an integrated health system in Los Angeles and Orange counties. This is a first in the nation partnership among an insurer and seven competing hospital systems. The seven hospital systems, which all have hospitals ranked in the top 30 in Los Angeles and Orange counties by U.S. News & World Report, are Cedars-Sinai, Good Samaritan Hospital, Huntington Memorial Hospital, MemorialCare Health System, PIH Health, Torrance Memorial Medical Center and UCLA Health System.

Vivity is a move away from traditional fee-for-service reimbursements that reward providers for performing a higher volume of procedures. Members get a simpler experience and convenient access to some of the best primary care doctors, specialists and hospitals in the region at an affordable price. The seven hospital systems and their affiliated medical groups have built a network of doctors that provide quality care and affordable prices to Vivity members in Los Angeles and Orange counties. CalPERS has agreed to use Vivity network doctors and hospitals within its Select HMO network in Los Angeles and Orange counties. Large group brokers can start requesting proposals on Oct. 1, with coverage starting on Jan. 1, 2015. For more information, visit www.VivityHealth.com.

Doctor Arrested For Insurance Fraud

A Castro Valley physician and surgeon, Douglas J. Abeles, M.D., was arrested for an insurance fraud scheme he conducted out of his East Bay business office. He has been charged with 31 felony offenses following an investigation by the Alameda County District Attorney’s Office and the California Department of Insurance. For several years he billed insurance companies for medical services that were not provided. Douglas Abeles, M.D., had an orthopedic medical practice in Castro Valley, and operated at least four medically related businesses from an office located at the Castro Valley-Hayward border. He allegedly fraudulently billed insurance companies for lab reports.

Sentencing Update on Ex-Insurance Broker Arrested for Embezzlement

John Monreal, 46, of Torrance pleaded no contest to one felony count of grand theft of funds and one count of diversion of funds for personal use. He was ordered to pay over $12,000 in restitution to his victims. Monreal scammed multiple consumers into believing they were insured while he collected their premiums and only passed on part of the payment to the insurer. Monreal continued to act as a broker after his license was revoked in 2010 at the John Monreal Insurance Agency. Monreal issued checks to insurance carriers for insurance policies that were eventually cancelled due to insufficient funds or partial payment. Monreal convinced clients to pay the full annual premium on an insurance policy in exchange for a reduced rate. He insisted that checks for the policies be made payable to him. He gave victims a certificate of insurance that indicated they were covered, but only a portion of the premium was remitted to the insurance carrier, leaving Monreal’s clients without coverage. In many cases, the consumers only realized that they had been defrauded when a collection agency representing the insurance company contacted them.

Onecare Enrollment Reopens November

The Centers for Medicare & Medicaid Services (CMS) will lift the enrollment freeze on OneCare, effective November 1, 2014. On that date, CalOptima may begin welcoming new members into OneCare, a Dual Eligible Special Needs Plan. “The CMS action signals recognition of significant improvements by CalOptima and our provider partners toward our promise of quality care for members,” said Michael Schrader, chief executive officer. The freeze was enacted early this year after CMS auditors found serious threats to patients’ health and safety. In January, federal auditors said CalOptima denied coverage for critical prescriptions covered by law, failed to pay for emergency services, and severely mismanaged one of its programs, reports the Orange County Register. As a county organized health system, CalOptima provides publicly funded health care coverage for low-income children, adults, seniors and people with disabilities in Orange County, Calif. CalOptima serves more than 630,000 members with a network of more than 7,000 primary care doctors and specialists, as well as 30 hospitals. For more information, visit www.caloptima.org.


Guide to Dental Care Coverage

DentalPlans, the largest dental savings plan marketplace, has launched a resource center to help consumers and businesses navigate the Affordable Care Act’s effect on dental coverage at www.dentalplans.com/affordable-care-act.

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