IN CALIFORNIA
Covered California Announces Contract Changes with Carriers
Covered California adopted significant changes to its contracts with health insurers. The contract provisions were developed over the past year with consumer advocates, health plans, clinicians, other stakeholders, and subject matter experts. Plans must do the following for years 2017 to 2019:
• Ensure that all consumers select or are provisionally assigned a primary care clinician within 30 days of when their plan goes into effect.
• Exchange data with providers. This will enable physicians to be notified if their patients are hospitalized and track trends and improve performance on chronic conditions, such as hypertension or diabetes.
• Identify hospitals and providers that deliver poor-quality care or unwarranted high-cost care. Health plans will be expected to work with them to improve their care or lower their costs. Hospitals that don’t improve and don’t provide justification will be excluded from Covered California networks as early as 2019. Covered California will adopt a payment system for hospitals, such as the one employed by the Centers for Medicare and Medicaid Services (CMS). Over time, it will put at least 6% of reimbursement at risk or subject to a bonus payment based on quality performance.
• Manage high-cost pharmaceuticals and help consumers understand the effectiveness and costs of their drug treatments as well as any alternatives.
• Track health disparities, identify trends in disparities, and reduce disparities, beginning with four major conditions: diabetes, hypertension, asthma, and depression.
• Develop programs to identify and manage at-risk enrollees with requirements to improve in targeted areas.
• Provide tools to help consumers understand their diagnosis and treatment options and understand their share of costs based on the contracted costs of their plan.
Covered California will encourage plans to promote advanced models of primary care including patient-centered medical homes and integrated health care models, such as accountable care organizations. Also, Covered California is improving its patient-centered benefit design for 2017 plans. Outpatient care in Silver, Gold, and Platinum plans will not be subject to a deductible. Bronze plan consumers would get three outpatient visits that are not subject to the deductible, in addition to the free preventive visits. For 2017, Covered California is proposing to lower out-of-pocket costs for primary care and urgent care. For more information, visit board.coveredca.com.
HEALTHCARE
Health Insurance Stocks Improve
The stock price performance of health insurance companies increased 11% in 2015, according to a report by A.M. Best. Stock price performance rose 2.5% in the fourth-quarter 2015 after a pullback of 12.2% in the previous quarter. The health insurance industry had strong year-over-year revenue growth of 14.3% through year-end 2015. More than 40% of the revenue growth was from UnitedHealth, which saw revenues increase by $26.6 billion. Operating margins have been affecting by a slight increase in medical trends, an increase in generic prescription drug costs, and new expensive specialty pharmaceutical medicines. Despite that, the revenue increases led to a year-over-year growth in operating earnings of 9.6%.
However, A.M. Best’s outlook for the health insurance industry was recently revised from stable to negative, largely because of the Affordable Care Act’s (ACA) pressure on.earnings and capitalization. There is growing concern about compressed margins. UnitedHealth has said that it may stop offering insurance plans to individuals through the public exchanges established by the ACA. It will be interesting to see if there is a domino effect if UnitedHealth exits the health insurance exchanges, according to AM Best.
A.M. Best has a favorable view of the industry’s emphasis on diversifying, implementing technology, and reducing expenses. These strategies should continue to improve revenue and earnings growth. For more information, visit www3.ambest.com/bestweek/purchase.asp?record_code=248015.
Merger Improves Health Net’s Financial Strength
A.M. Best has improved its outlook for Health Net, giving the company a financial strength rating of B++ (Good) This follows Centene’s acquisition of Health Net on March 24. Health Net is now a wholly owned subsidiary of Centene, and is no longer a publicly traded company. The combined company will be headquartered in St. Louis. The acquisition has created a leading diversified multi-national health care organization with more than 10 million members throughout the United States.
A.M. Best says that the combined company will have a strong presence in the California Medicaid program and will be one of the largest Medicaid managed organizations in the country. it also provides growth opportunities in government programs including TRICARE, the Dept. of Veterans Affairs, and exchange products in multiple states. Also, the new company may save a lot by integrating specialty services and improving capabilities in information technology and process management. Over the past eight months, Centene and Health Net teams have been developing an integration plan that uses the talents and expertise of companies.
Health Net’s 2015 fiscal year end operating showed increased revenue and earnings. Also, the company reported higher shareholder’s equity for the year. The growth trends have been supported primarily by higher membership in Medicaid programs. However, some of Health Net’s core subsidiaries have reported a significant decline in earnings due to the costs of participating in the exchange and other fees related to the Affordable Care Act. Also, during 2015, a number of capital infusions from the holding company were made to several of its insurance subsidiaries to maintain risk-adjusted capital levels. A.M. Best expects that the parent company to continue to provide capital support when needed. Health Net shareholders received 0.622 shares of Centene common stock and $28.25 in cash for each share of Health Net common stock held at closing, for a total transaction value of about $6 billion, including the assumption of debt. For more information, visit ambest.com.
CMS Proposes to Test Value-Based Payment Strategies for Part B
The Medicare Rights Center sent a letter CMS in support of its proposal to test value-based payment strategies for prescription drugs under Medicare Part B. According to CMS, the Part B prescription drug reimbursement model establishes a perverse incentive to prescribe higher cost medication. The reimbursement is determined by average-sales price plus 6%. CMS wants to test a variety of innovations, many of which are in use in the private insurance market. The new methods are designed to promote the most clinically effective medications, not the most expensive. CMS wants to test multiple strategies that encourage the use of high-value medications, especially those that eliminate or lower cost sharing for beneficiaries and promote evidence-based clinical decision support tools.
Joe Baker, president of Medicare Rights said, We’re confident that CMS’ proposed payment model will preserve beneficiary access to needed prescription drugs while advancing innovative strategies to ensure
that people who need Part B medications receive the highest value care available to them. We believe the proposal can yield results meaningful to today’s beneficiaries through enhanced care quality, and to future generations, through a stronger and more sustainable Medicare program.” For more information, visit medicarerights.org/pdf/040616-ltr-on-proposed-partb-model.pdf.
How Do We Pay for a Growing Medicare Program?
To keep Medicare’s spending in check, seniors may need to pay a larger share of their healthcare, according to a study by National Center for Policy Analysis (NCPA). The study recommends the following:.
• Raise beneficiary premiums to cover excess cost growth.
• Raise deductibles and copays. Means-tested contributions to health savings accounts (HSAs) by the
federal government could complement the reformed insurance.
• Constrain the federal payment rate by procedure and service. Rather than paying the CMS-determined reimbursement to each provider, Medicare would give those amounts to the participants. Over time, a real market would emerge for health care due to seniors’ demand for lower prices.
• Have premium support payments rise at the same rate as per-capita GDP. This would offer a significant level of individual choice and payment responsibility while limiting the role of CMS in the Medicare market.
For more information, visit ncpa.org/pub/paying-for-medicare-now-and-in-the-future.
Changing Consumers’ Views on Limiting Patient and Doctor Choice
The public is deeply skeptical about limiting patient choice and physician autonomy regardless of the medical evidence, according to a study by the Center for Patient and Consumer Engagement published in the April issue of Health Affairs. Most people believe that clinicians should be free to depart from guidelines or evidence in individual situations.
Many equate clinical evidence with a doctor’s experience and clinical judgment rather than with clinical research. However, when people learn about medical evidence, they give more weight to it. For example, study participants were more willing to limit patient choice and physician autonomy when they learned about and discussed the threats of antibiotic resistance. Nonetheless, 25% continued to believe that physicians should have unfettered freedom to provide treatments that research shows won’t work. However, people don’t necessarily believe others should have to pay for such treatments. For more information, visit aircpce.org.
DOL Expands Fiduciary Rule to HSAs
The Dept. of Labor issued a final rule with a fiduciary standard that covers all financial professionals offering investment advice for retirement accounts —including 401(k)s, IRAs, health savings accounts (HSAs), and others. The National Assn. of Health Underwriters (NAHU) is concerned that expanding the fiduciary standard will limit employee access to HSAs. Janet Trautwein, NAHU CEO said, “Employees who participate in employer-sponsored health plans don’t bear the same type of financial risk as people investing in retirement plans. It is a mistake to apply the same requirements to types of plans. The new rule also creates unprecedented new compliance responsibilities and liabilities for employers and licensed health insurance agents and brokers. NAHU is apprehensive that employers and health insurance agents and brokers will be unable to accept this new liability and will be unable to assist employers with HSAs through employer-sponsored health plans. This may reduce access to the benefits of HSAs for their employees, resulting in fewer health plan choices and more limited benefit options.” For more information, visit nahu.org.
Health Plan Costs & Options by State and Industry
Health insurance premium renewal rates climbed 6% in 2015 and 5.6% in 1914, according to a survey by United Benefit Advisors (UBA). Businesses with fewer than 25 employees were hit the hardest, says Les McPhearson, CEO of UBA, “In 2014, employers overwhelmingly used early renewal strategies to delay moving to higher cost ACA-compliant plans and keep increases in check. These delay tactics ran out in 2015. As a result, these small businesses were forced into higher-cost, community-rated ACA plans. Without the negotiating power of bigger groups or the protection from grandmothering, many small employers were left with no cost containment strategies other than reducing coverage.”
UBA finds significant regional differences in health plan costs. Alaska has the highest average annual cost of $12,822 per employee. Matt Weimer of Diversified Insurance Solutions, a UBA partner firm said, “To put that in perspective, that is 27.4% above the national average of $9,736…In fact, Alaska is 11% above the fifth highest cost state of Mass., which comes in at $11,468 average per employee annually.”
Alaska’s average annual cost per employee is 51% higher than Hawaii, which is 25% below the national average at $7,610. More than 40 years ago, Hawaii adopted an integrated care model to address cost, quality, and access. Alaska has resisted most forms of care management including the carrier’s ability to contract with physicians. Lon Wilson of the Wilson Agency, a UBA Partner Firm in Alaska said, “We are…beginning to see collaboration among payers, providers, and hospitals, but we are way behind the rest of the country.” In Alaska, there is a perfect storm of high cost of care with large variations in quality, limited access to care, a small population, the geography, the cultural diversity, and a transportation infrastructure that’s lacking.
The five best states for health plan costs include Arkansas at $7,704, New Mexico at $7,793, Virginia at $7,858, and Oklahoma at $7,915. Premiums increased the most for singles in Louisiana (23.5%) and California (17%). Families saw the biggest premium increase (7.6%) in South Carolina. Connecticut was the only state to see a modest decrease in single premiums (5%). Decreases in family premiums were largely nonexistent.
Total costs, per employee, for the retail, construction, and hospitality sectors are 8.6% to 21% lower than average. Surprisingly, the finance industry eclipsed the government sector in total costs at $11,842 per employee, a 16% increase from 2014. Government plans still have the third highest average cost per employee at $11,817, yet employee contributions are 45% ($2,105) less than the average employee contribution of $3,333.
Fifty-four percent of employers offer one health plan to employees while 29% offer two plan options, and 18% offer three or more. Compared to the previous five years, 28% more employers offer three or more plans. More employers are offering expanded choices by offering private exchanges with high-cost, medium-cost, and low-cost options, a trend that UBA expects to continue to increase. Not only do employees get more options, but also employers can introduce lower-cost plans that may attract enrollment and lower their costs, according to UBA. For more information, visit UBAbenefits.com.
Younger Workers Least Comfortable Navigating U.S. Healthcare System
Working families and workers under 30 are the least comfortable navigating medical benefits and healthcare system, according to a survey by Accolade. Only 56% of young workers are comfortable navigating the healthcare system compared to 76% of retirees. They also report the least positive experience with their healthcare and benefits (38%) and the most hassles in navigating their care, including understanding cost, coordinating care, choosing and understanding benefits, and finding a doctor they can relate to. Additionally, this group cites financial issues and a lack of knowledge about healthcare as the top reasons for making poor health decisions.
Working families (average age 39) gave the second-lowest positive rating of their benefits and healthcare experience (42%). Working families spend much more time dealing with healthcare issues than do younger or older workers, perhaps reflecting the added health needs of children and parents or other relatives. Working families cite cost of services and medications as the top reason (60%) driving poor healthcare decisions and also cite competing responsibilities (42%) to a greater degree than other groups (averaging 30% each).
Older workers (average age 56) are the second-most pleased with their healthcare experience, though 45% gave it a positive rating. Older workers also miss less work, are less distracted by health issues, and spend less time dealing with healthcare issues than working families. Retirees (average age 69) express the most comfort in their healthcare decision-making abilities (76%) and the most positive healthcare experience (59%). They perceive the fewest hassles in navigating their care and benefits.
Robert Cavanaugh, president of Field Operations for Accolade said, “Companies are spending millions of dollars each year launching programs…to help their employees use healthcare effectively, but this survey shows how individuals are getting lost in the process. Health benefits executives should be asking if they’re really getting the maximum return on these tools and technologies, if they’re actually creating additional problems and complexity for employees, and whether programs are working for everyone, from young workers to working families to older workers at different stages of their life and health journeys.” Accolade recommends that employers do the following:
• Consider multi-generational needs and priorities in their health benefit strategy. Ask the following questions, “Are all eligible employees using health programs and tools?” “What should I offer to employees to align with healthcare needs and preferences at different life stages?”
• Tailor messaging to highlight different benefits and use different imagery that resonates with each group.
• Personalize support. People need other trusted resources who know employees’ benefits and their life circumstances to serve as guides.
For more information, visit www.accolade.com.
NEW PRODUCTS & SERVICES
Doctor Matching Website for Cosmetic Surgery
Zwivel.com is a new free HIPAA privacy protected online platform that allows users to upload photos and videos to digitally consult with cosmetic surgeons.
Online Dental Plan Tools
Cigna is offering online comparison tools to make it easier for DPPO members to select a dentist and budget for dental expenses.The enhancements include personalized out-of-pocket costs by service and by dental office as well as detailed profiles about each dentist, often including photos and videos. The tools are now available on myCigna.com, Cigna’s personalized customer website, and the myCigna mobile app.
ARAG Launches Legal Insurance Products for Individuals
ARAG, launched consumer-direct legal insurance products in the United States. Previously available through employee benefit programs alone, ARAG’s new products are designed to offer access to affordable, broad-based legal representation for all consumers. Consumers pay a monthly premium that is generally $15 to $30. They can meet with an attorney when they experience a legal event, such as purchasing a home, creating a will, or handling a traffic ticket. Depending on their legal plan, consumers may pay a deductible, receive services at reduced rates or may have attorney fees paid in full by the insurer. For more information, visit ARAGlegal.com.
Life Insurer to Reward Consumers for Healthy Eating
John Hancock Insurance added the HealthyFood program to its John Hancock Vitality solution. Now policyholders can earn rewards for the healthy food choices. They get real-time discounts and/or cash-back up to $600 a year on their grocery bills and program points that lead to savings on their annual premiums—as much as 15%. The Vitality program, which was introduced a year ago, provides savings and rewards to policyholders who complete health-related activities like exercising, getting an annual health screening, or getting a flu shot. People have the option of tracking their physical activity with smartphone apps and devices like the Apple. The Vitality HealthyFood component takes the program a step further by rewarding policyholders for purchasing healthy food at any of the 16,000 participating stores nationwide. For more information, visit
nutrisavings.com/all-retailer.
MyTherapy App
The new MyTherapy app combines medication reminders and health tracking. The app reminds you to take your meds, to get active, and track your vitals. MyTherapy translates your therapy into a simple to-do list. MyTherapy’s built-in health journal summarizes your medication intake and other health-related information. MyTherapy is available free from Google Play Store and iTunes.
Website Shows the Pros, Cons, and History of the Minimum Wage Debate
ProCon.org has published nonpartisan research on the debate over raising the federal minimum wage. The new website presents sourced pro and con arguments, as well as an extensive illustrated history. Sources referenced include the Congressional Budget Office, OECD, numerous think tanks, and economists
at institutions, such as Cornell, UCLA, Johns Hopkins, Duke, Oxford, University of
Chicago, and the Federal Reserve.
REMINDER
April Issue of California Broker Magazine Now Online
Are you not getting enough print copies of California Broker Magazine or is your office mate hogging them? The April issue is now online at calbrokermag.com. It features articles on technology for brokers, self funding, vision, disability, wellness, long-term care, COBRA, and the OCAHU and IEAU shows. You can download the entire magazine or just the clippings you want. There are also options for sharing articles on social media.