Employees Will Continue to See Higher Cost Sharing


• Employees Will Continue to See Higher Cost Sharing
• Are Patients with True Emergencies Being Discharged from the ER?
• The Keys to Controlling Specialty Drug Costs
• Hospital Inspection Reports Are Now Public
• Americans Are Confident about Choosing Health Coverage
• More Americans Are Getting Preventive Care
• Kaiser and TriCare Get Highest Marks in Customer Satisfaction
• Ascension Benefits Gains Recognition
• Closing the Gender Gap in Retirement Savings
• Mergers & Acquisitions Activity Falls Sharply
• National Prescription Discount Card Program
• Web-based Annuity Management
• Guaranteed Issue Disability
• Whitepaper On Life Settlements
• Key Tax Issues for Annuities
• Webinar on Exchanges
• Congress Considers Licensing Reform


Employees Will Continue to See Higher Cost Sharing

healthcare billingEmployees contribute 42% more for health care than they did five years ago, compared to a 32% increase for employers. In the coming years, more than 80% of employers that responded to a Towers Watson survey plan to raise the share of premiums paid by employees. That includes rethinking their subsidy strategy for dependents. Employers expect average total health care costs for active employees to reach $12,136 in 2013, up 5.1% from in 2012. That’s the lowest cost increase in 15 years, according to a Towers Watson survey. The total employee cost share, including premiums and out-of-pocket costs, has climbed from 34% in 2011 to 37% in 2013. Subsidies for retiree medical coverage have declined, too, with only 15% of companies offering them to newly hired employees.

Ron Fontanetta of Towers Watson said, “Employers are redefining their financial commitment to health care, in part, to avoid the potential payment of an excise tax in 2018. Yet they are also mindful of a growing affordability gap for employees as health care costs take their toll on take-home pay. To combat these challenges, we expect employers to take more aggressive action, using emerging strategies to improve delivery, cost management and employee accountability.”

Employers are looking at new options, such as exchanges for active employee and retiree populations. Nearly 30% of employers are already facilitating access to an exchange-based solution for retirees in 2013, with another 36% planning to do so over the next three years.

Eighty-two percent say that they are not likely to direct active employees to an exchange without a subsidy in the next five years. Sixty percent say the same, even with a subsidy. The survey also reveals the following:
• 66% offer an account-based health plan (ABHP); that number is expected to increase to 79% in 2014.
• Nearly 15% of those with an ABHP now use a total-replacement ABHP, up from 7.6% in 2010.
• Median enrollment in ABHPs nearly doubled, surging from 15% in 2010 to nearly 30% in 2013.

These enrollment patterns underlie a fundamental evolution in ABHPs as employers use them increasingly to offer incentives and align with post-retirement strategies. Nearly two-thirds of respondents offer financial rewards to encourage employee participation in health programs, but tougher requirements are on the way. Sixteen percent align their rewards and penalties to biometric targets (other than tobacco use), and another 31% are considering this strategy for 2014. There is growing interest in expanding financial incentives to include spouses: 59% anticipate doing so by 2014, up from 23% in 2012.
The study looked at why certain employers have seen much lower cost increases over the past four years. Fr the best performers, average health care cost increases only 1.7% in 2012, which is less than half the median increase and roughly in line with the general inflation trend. In 2013, best performers took the following steps:
• Consolidated vendors.
• Gave incentives to providers to invest in new technologies to improve care coordination.
• Helped employees make smarter health care decisions using popular communication methods such as social media.
• Put more emphasis on transparency of provider prices and quality.
• Invested in case management for high-cost cases.
• Tied financial incentives to measurable improvements in employees’ health, and extended incentives to spouses.
• Began implementing new payment methods to providers, giving them more responsibility for delivering high-quality, efficient care.
For more information, visit businessgrouphealth.org.

Are Patients with True Emergencies Being Discharged from the ER?

The American College of Emergency Physicians (ACEP) points to a growing practice of insurance carriers (including Medicaid) denying payment for so-called “non-emergency” visits to the ER. ACEP says that this practice is likely to discourage patients from seeking the appropriate care for true emergencies.

The small numbers of emergency patients who are discharged from the ER with “primary care treatable” diagnoses have the same symptoms as patients who have been determined to need immediate or emergency care, hospital admission, or surgery, according to a study to be published in the Journal of the American Medical Association (JAMA).

Lead study author Maria Raven, MD, MPH, FACEP said, “Two patients could come to the emergency department with the same symptoms; one could be diagnosed with a condition that is not that serious while another could be diagnosed with a life-threatening condition…There is no possible way to determine the outcome of the visit in advance, and our study has shown that it’s not good policy to do so after the fact. Insurance companies should not treat these two patients differently. Patients should never be burdened with the task of diagnosing themselves out of fear that their potential emergency isn’t covered by insurance.”


Although only 6.3% of emergency department visits were determined to have “primary care treatable” discharge diagnoses, the chief complaints for these visits were the same as those reported for 88.7% of all other emergency visits. A substantial portion of these visits required immediate emergency care or hospital admission. These findings suggest that these “primary care treatable” discharge diagnoses are unable to accurately identify non-emergency ER visits.

Dr. Raven said, “If a triage nurse were to redirect patients away from the ER based on non-emergency complaints, 93% of the redirected ER visits would not have had primary care-treatable diagnoses. The results call into question reimbursement policies that deny or limit payment based on discharge diagnosis. The majority of Medicaid patients, who stand to be disproportionately affected by such policies, visit the emergency department for urgent or more serious problems.” For more information, visit http://www.acep.org

The Keys to Controlling Specialty Drug Costs

Employers that use multiple cost management programs have a 50% lower specialty drug cost trend, according to a study by Express Scripts. “Specialty drug costs and use have escalated without sufficient oversight to manage waste or misuse of these expensive medications. Add in the impact of bad health decisions and you get poor financial and clinical outcomes, said Glen Stettin, MD, of Express Scripts.” Specialty medications are expected to account for $1 out of every $4 spent on prescription medications by 2014.

The following are some major factors that contribute to the rising costs of specialty medications for complex diseases such as cancer, hepatitis C and multiple sclerosis:
• Price inflation
• Increased utilization
• The introduction of new drugs

Employers that did not manage prescription costs saw a 28% annual average increase in specialty drug spending per member. In contrast, employers that had tight management of prescription drug costs only saw a 14% an annual increase. Tightly managed programs also saw higher adherence rates in top therapy classes, such as multiple sclerosis and oncology.

There was an 18% increase in spending on specialty drugs in 2012 compared to 17% in 2011. Unit costs are driving the specialty medication trend in the top 10 therapy classes. Specialty medications for inflammatory conditions, multiple sclerosis, cancer and HIV accounted for nearly 70% of annual spending on specialty drugs. The hepatitis C virus has a relatively low per-member-per-year cost of $7.82, but it’s the highest trending therapeutic category at 29%. It is expected to increase rapidly with the advent of new therapy regimens and screening guidelines.

Nearly 50% of specialty drug costs are billed on the medical side of the plan benefit, where it is difficult to apply the various pharmacy benefit solutions that can drive down costs. Spending on traditional medications decreased 1.5%, predominantly due to generics. For more information, visit https://www.express-scripts.com.

Hospital Inspection Reports Are Now Public

The Association of Health Care Journalists launched www.hospitalinspections.org. The site compiles hospital inspection reports dating back to January 2011. The website features government inspections of acute-care hospitals and critical-access (rural) hospitals resulting from complaints. Until now, reporters and the public had to file Freedom of Information Act (FOIA) requests to the Centers for Medicare and Medicaid Services (CMS) to get the documents, a process fraught with delays that can stymie timely public knowledge of problems at hospitals. For year, AHCJ has urged the government to release the deficiency reports in an electronic format. The inspection reports are easily searchable by keyword, city, state, and hospital name.


However, it does not include reports of deficiencies at psychiatric hospitals or long-term care hospitals, nor does it include the routine hospital inspections. Thousands of hospital inspection reports are still under wraps. AHCJ sent a letter urging the largest private a creditor of hospitals to make its hospital inspections public. As a private agency, the Joint Commission is not subject to FOIA. It  does complaint and routine inspections separately from CMS. The commission has rejected two previous AHCJ requests for this information, saying disclosure would compromise its efforts to improve hospital quality. AHCJ president Charles Ornstein, a senior reporter at ProPublica in New York said, “The AHCJ board cannot accept the notion that patients are best protected by keeping hospital problems secret. Such reasoning also flies in the face of growing consensus among health care leaders and policy makers about the importance of transparency to improve medical care quality.”

Americans Are Confident about Choosing Health Coverage

A majority of Americans (including the uninsured) are confident in their ability to choose health coverage, according to a survey by Express Scripts. More than half of those who are most likely to enroll in the exchanges say they’re prepared for the challenge. Fifty-three percent of the uninsured are confident that they will be able to select the best health plan for themselves and their family. Sixty percent of those with individual coverage say they’re ready to make the right choice. However, the survey shows that nearly half are not as prepared for this opportunity and will need education and support. For more information, visit https://www.express-scripts.com.

More Americans Are Getting Preventive Care

Seventy-one million more Americans are getting preventive services coverage without cost-sharing under the Affordable Care Act, according to the Dept of Health and Human Services (HHS). This includes colonoscopies, pap smears, mammograms, well-child visits, flu shots, and many more services. Millions of Americans were in health plans that did not cover these services. Based on the Kaiser Family Foundation’s Employer Health Benefits Survey and Census Bureau data, HHS estimates that about 71 million Americans are now getting expanded coverage of preventive services due to the Affordable Care Act. Kaiser Family Foundation’s Employer Health Benefits Survey in 2012 found that 41% of all workers were covered by employer-sponsored group health plans that expanded their list of covered preventive services due to the Affordable Care Act.

Kaiser and TriCare Get Highest Marks in Customer Satisfaction

TriCare and Kaiser Permanente earned the top customer experience ratings in the health insurance sector based on a study of 10,000 U.S consumers. At the other end of the spectrum, Empire (BCBS), Medicaid, and Highmark (BCBS) were the lowest rated health plans. Bruce Temkin, managing partner of Temkin Group said, “While health plans continue to deliver terrible customer experience, there’s some glimmer of hope. The industry’s ratings have consistently improved over the last three years.” The average rating for health plans has improved steadily from 50.3% in 2011 to 54.8% in 2013. TriCare’s rating of 71% is 6% ahead of the second-highest-ranked health plan, Kaiser Permanente. TriCare earned top marks for functional and emotional experience while Kaiser Permanente earned the top accessible rating. To get the free report, visit www.temkingroup.com.


Ascension Benefits Gains Recognition

The San Francisco Business Times named Ascension Benefits & Insurance Solutions as one of the largest insurance brokerages in the East Bay. Ascension, which focuses on employee benefits, is part of Ascension Insurance, a national consulting and brokerage firm founded in 2008. Business Insurance recently named Ascension Insurance as one of the fastest-growing firms in the U.S. In 2012, the firm posted 49% revenue growth over 2011. Ascension Insurance is ranked within the top 30 largest agencies by revenue size, with nearly 450 employees and 35 locations nationwide. For more information, visit http://www.ascensionbenefitsins.com.


Closing the Gender Gap in Retirement Savings

Women are closing the gap in retirement plan account balances and savings rates, according to fourth quarter data from defined contribution plans administered by MassMutual. The average deferral rate for female participants was 5.38%, an increase of 1.6% for the quarter. Men are saving at an average rate of 5.81%, an increase of 1.2% from the third quarter of 2012.

In the third quarter of 2010, women’s average account balances trailed that of men by 40.49%. But the gap has been closing gradually over the past 10 quarters. In the fourth quarter of 2012, women’s average account balance was 38.25% behind that of men. That’s an improvement of 5.6%. Elaine Sarsynski, CEO of MassMutual International LLC said, “We have customized our participant education offering on a number of fronts to drive action among segments such as women…The progress we are seeing indicates that participants are responding favorably.”

Seventy-three percent of asset allocation investments for women are in age-based strategies while men are almost evenly divided between age-based and risk-based strategies. The percentage of participants taking any kind of loan or withdrawal is the lowest of any fourth quarter in the past five years.

Average balances and average deferral rates are highest for the Silent Generation (born 1945 and earlier) and Baby Boomers (born 1946 to 1964). Combined, Generation Y and Generation X participants (born 1965 to 1995) represent 56% of total participants and 32% of defined contribution assets. While GenX/Gen Y participant numbers are higher, Boomers still have a greater share of the assets at 61%, but that gap is also closing. For more information, visit massmutual.com/retire.


Mergers & Acquisitions Activity Falls Sharply

The number of insurance mergers and acquisitions fell sharply in 2012, according to Conning’s annual study. Mergers and acquisition activity in the U.S. insurance market dropped in 2012, with transactions off 19% and aggregate deal volume off 21%. Conning analyst, Jerry Theodorou said that 2012 was expected to be a very active year due to high levels of industry capital and limited opportunity for organic growth.

Stephan Christiansen, Conning’s director of research said that M&A activity started strong in the first quarter of 2012. But the following two quarters were very slow due to the chilling effects of concerns about the economy. In the fourth quarter, there was a substantial uptick in activity in most sectors, which may set the stage for a strong 2013. Outside the U.S., the pace of insurance M&A declined less, buoyed by financial institutions selling their insurance operations to raise assets to repay government loans or meet regulatory requirements.” For more information, visit www.conning.com.


National Prescription Discount Card Program

Watertree Health launched its free prescription discount card program. The card has been introduced across the country over the past year using a network of local representatives. For more information, visit www.WatertreeHealth.com.

Web-based Annuity Management

Andesa Services launched the Policy Self-Service Portal. Customers can access policy information and manage routine policy maintenance easily and securely online, which reduces customer service costs for the carriers. For more information, visit www.andesaservices.com.

Guaranteed Issue Disability

California Guardian Brokerage/Pacific Advisors introduced the Income ProVider disability income insurance in California, providing access to guaranteed standard issue (GSI) programs in the state. The Income ProVider Policy Form 1200 features the following:
• Increased options after leaving the employer.
• A new suite of discounts for maximum savings.
• The presumptive disability benefit is included in the base policy.
• The six-month limit on recurring disability provision has changed to 12 months.
• More liberal language on working outside of U.S. language
• The rehabilitation and workplace modification provision has been removed.

For more information, customs quotes, or to meet with a disability product specialist, call Ani Manukyan of California Guardian Brokerage/Pacific Advisors at 800-775-1970 ext. 6 or e-mail ani_manukyan@pacificadvisors.com.

Whitepaper On Life Settlements

The Lifeline Program published a whitepaper for financial advisors, estate planners, and attorneys titled, “How to Offer Life Settlements to Your Clients.” The free guide is available at www.thelifeline.com/WhitePaper/2.


Key Tax Issues for Annuities

The National Assn. for Annuities (NAFA) offers a Webinar feature some of the most highly sought after experts on annuities and taxes. It will be held Thursday, March 28, 2013 8:30 a.m. Pacific Time. For more information, visit https://www1.gotomeeting.com/register/326887600

Webinar on Exchanges

DST Health Solutions is hosting a Webinar series on health insurance marketplaces. The four-part series, “Health Insurance Marketplaces-What You Need to Know, NOW” began March 20. (We were not able to announce this morning’s seminar in time because we did not receive the announcement until March 18.) The next seminar will be held March 27, 2013 at 10:00 a.m. Pacific Time. For more information, visit www.dsthealthsolutions.com.


Congress Considers Licensing Reform

The Senate Committee on Banking Subcommittee on Securities, Insurance, and Investments held a hearing on a bill that would streamline insurance agent licensing. The National Association of Registered Agents and Brokers Reform Act of 2013 (S.534) is also pending in the House (H.R. 1155).

NARAB II is designed to create a non-profit entity governed by a board of state insurance commissioners and industry representatives. They would apply licensing, continuing education, and nonresident insurance producer standards on a multi-state basis while preserving the laws of individual states. Identical bills were introduced by Senators Jon Tester (D-Montana) and Mike Johanns (R-Nebraska) in the Senate and by Representatives Randy Neugebauer (R-Texas) and David Scott (D-Georgia) in the House. Both bills were introduced on the same day in a powerful show of support, receiving 41 sponsors in the House and 14 sponsors in the Senate and drawing Members from both sides of the aisle. NAPSLO applauds the leadership of these Congressional leaders for the work they have done thus far, and looks forward to working with them to see this legislation become law.

State regulators would continue to be the primary regulators of insurance producers and enforcers of consumer protection laws. NARAB would not report to the federal government nor possess any federal regulatory power. Membership would be voluntary  with those that join enjoying the benefits of multi-state licensing. NARAB membership is contingent on meeting rigorous standards and ethical requirements.

“NARAB II has been a major legislative priority for NAPSLO members for some time. We are very excited to see it receive such powerful, bipartisan support in its introduction, and look forward to working with members of Congress to see it passed into law,” said David Leonard of the National Assn. of Professional Surplus Lines Offices.

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