For Healthier Employees and Healthier Businesses

November 17, 2018
Source: Excelsior Solutions

Earlier than expected, U.S. Food and Drug Administration (FDA) approved Kymriah, a revolutionary cancer treatment developed by Novartis Pharmaceuticals Corporation (Novartis) in late August.  This treatment involves a patients T cells being extracted and reprogrammed outside their body to recognize and target leukemia cells that have the specific antigen CD19 on their surface, and then subsequently being re-infused into the patient’s body with a heightened ability to recognize and kill those cells, leaving normal cells alone.  The approval of Kymriah marks the first time gene therapy will be available in the United States.

Importantly, Kymriah will impact the medical benefit rather than the pharmacy benefit.  Excelsior Solutions has confirmed that a limited number of locations throughout the country will be able to administer this treatment, perhaps fewer than ten.  Each facility and physician approved to administer this treatment will have completed an enhanced training course designed by the manufacturer, so patients will not be walking into their local pharmacy, or even using a specialty pharmacy, to have traditional “prescriptions” of Kymriah filled.

Initially, the use of Kymriah will not be widespread.  The disease for which Kymriah was developed (B-cell acute lymphoblastic leukemia that has resisted treatment or relapsed in children and young adults ages 3 to 25) is not common.  Only 5,000 people a year are affected, of whom 60 percent are children or young adults.

Because this is a customized treatment that involves modifying the patients T cells, a specialized single administration method, and aggressive monitoring for side effects, Kymriah will cost a on-time fee of $475,000.  However, Novartis revealed that through collaboration with the U.S. centers for Medicare and Medicaid Services, there will be no charge if a patient does not respond to Kymriah within the first month after the treatment.

Kymriah’s approval moves the ball forward in terms of biological treatments for this particular form of leukemia and opens the door for future individualized treatment development.

To learn more about the specifics of the Kymriah treatment, read the FDA’s press release announcing its approval and a technical explanation from the National Cancer Institute.

To see what others are saying about Novartis and Kymriah, visit FirstWord Pharma and The New York Times for related articles.

For more information on the management of specialty drug costs, please contact your Group Resources Account Manager.

Andy Willoughby
Senior Vice President & Chief Operating Officer
678 475 3606 – andy@groupresources.com

This electronic transmission and any attached document and/or file is confidential and intended for the use of the individuals to whom it is addressed. This communication may contain material protected by privacy Laws or regulations. Any further distribution or copying of this transmission and/or attached document or file is strictly prohibited. If you received this message in error, please notify the sender and destroy the message and all attached documents and/or files immediately. Group Resources is not liable for any use or misuse contrary to these directions.

For Healthier Employees and Healthier Businesses

November 10, 2017

ObamaCare’s medical loss ration creates incentives for insurers and providers to hoodwink customers.
By Keith Lemer, CEO of The WellNet Healthcare Plan, a health-care services company.

Here’s a strange paradox: Health-care costs have increased by an unsustainable rate of about 8.5% each year over the past decade, according to PwC’s Health Research Institute.  Already, the average employer-based family health insurance plans costs more than $18,000 annually.

But Medicare spending has been relatively stable.  Over the past three years, the program’s payouts to hospitals have increased by only 1% to 3% a year, roughly even with inflation.  The prices paid for some core services such as ambulance transportation, have actually gone down.

To see what’s happening, we can start by pulling back the curtain on how preferred provider organizations do business.  A PPO is a network of preferred health-care providers such as doctors and hospitals, typically assembled by an insurance carrier.  In theory, the insurer can save money for its customers by persuading providers in the network to discount their services in exchange for driving volume to their facilities.

United Healthcare Choice Plus, for instance, boasts that its PPO – a network of more than 780,000 professionals – cuts the cost of typical doctor visits by 52%, while saving 69% on MRIs.  Pull back the curtain, and you’ll see these discounts are an accounting trick.  To allow PPOs to advertise big discounts, providers simply inflate their billed charges on a whole range of services and treatments.

Don’t insurers have a natural incentive to keep provider prices down, even if they don’t end up paying the list price?

In fact, no-at least not since the Affordable Care Act took effect.  That law established a “medical loss ratio”, which requires insurers covering individuals and small businesses to spend at least 80 cents to every premium dollar on medical expenses.  Only 20 cents can go toward administrative costs and profit. (For insurers offering large group plans, the MLR rises to 85%.)

If a provider raises the cost of a blood test or medical procedure, insurers can charge higher premiums, while also boosting the value of their 20% share.  Insurers can make money only if they lower their administrative expenses or charge higher premiums.

In this way, the MLR rule encourages insurers to ignore providers’ artificial price hikes.  Insurers can continue to attract customers with the promise of steep discounts through their PPO plans – and providers can continue to ratchet up their prices.  By hoodwinking their customers, both insurers and providers make more money.  Since insurance costs are merely a derivative of health-care costs, the result has been a steady rise in insurance costs for millions of working families.

For employers caught in this price spiral, there is a way out: partial or full self-insurance.  When businesses self-insure, they pay employee health claims directly.  That creates an incentive for businesses to question – and push back on – providers’ price increases.  Self-insuring businesses can strengthen their leverage by using “reference-based pricing,” which caps payments for “shoppable” – nonemergency – services at the average price in a local market.  Members whose providers with prices below the limit receive full coverage.  If they use a provider that charges more than the limit, they pay the difference out-of-pocket.

This setup creates a strong incentive to control costs: Patients have a reason to shop around for the best value, while providers are pressured to keep their prices below the cap.  The most expensive doctor is not always the doctor with the best outcomes.

That’s what happened when the California Public Employee’s Retirement System adopted a reference-pricing approach a few years ago.  The agency had noticed that provider charges for hip and knee replacements varied from $15,000 to $110,000.  In 2010, Calpers established a reference price of $30,000 for the procedures. Predictably, patients flocked to providers charging that price or less and shunned higher-cost facilities.  Over the next couple of years, the number of California hospitals charging below $30,000 for a hip replacement jumped by more than 50%.  In the first year Calpers saved as estimated $2.8 million on joint replacements.

What worked for Calpers can work just as effectively for small and midsize businesses.  Today’s medical inflation is exactly what one would expect from health policies that reward insurers and providers for raising prices.  Employers should not accept this status quo.  By self-insuring and setting their own reference-based reimbursement, businesses can sidestep the traditional insurance model that continues to bleed them dry.

Mr. Lemer is CEO of The WellNet Healthcare Plan, a health-care services company.
Source: Riskmanagers.us
Andy Willoughby

Senior Vice President & Chief Operating Officer
(678) 475 3606 – andy@groupresources.com

This electronic transmission and any attached document and/or file is confidential and intended for the use of the individuals to whom it is addressed. This communication may contain material protected by privacy Laws or regulations. Any further distribution or copying of this transmission and/or attached document or file is strictly prohibited. If you received this message in error, please notify the sender and destroy the message and all attached documents and/or files immediately. Group Resources is not liable for any use or misuse contrary to these directions.

For Healthier Employees and Healthier Businesses

November 3, 2017
SBPA Update: October 2017

Background
The Affordable Care Act imposes a fee on plan sponsors of certain self-funded health plans to help fund the Patient-Centered Outcomes Research Institute, as well as on fully insured carriers.  The fee, required to be reported once a year on the second quarter Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the plan or policy.

The fee applies to plan or policy years ending on or after October 1, 2012 and before October 1, 2019.  The PCORI fee is filed using Form 720, Quarterly Federal Excise Tax Return.  Although Form 720 is a quarterly return, for purposes of PCORI, Form 720 is filed only once annually, July 31.

IRS Notice 2017-61
For policy years and plan years that end on or after October 1, 2017, and before October 1, 2018, IRS Notice 2017-61 provides the adjusted applicable dollar amounts to be multiplied by the average number of covered lives.

The below link provides a chart of the fees.
https://www.irs.gov/affordable-care-act/patient-centered-outreach-research-institute-filing-due-dates-and-applicable-rates

Calculating the Average Number of Lives
For self-funded plans, the fee imposed on a plan sponsor is based on the average number of lives (participants and dependents) covered under the plan.  The fee is calculated by multiplying the average number of lives covered under the plan for the plan year by the applicable dollar amount.  The final regulations offer a choice of three alternative methods to determine the average number of lives covered under a self-funded plan.  A plan sponsor must use the same method of calculating the average number of lives covered under the plan consistently for the duration of the year.

Three Alternative Methods

• Actual Count Method – A plan sponsor may determine the average number of lives covered under the plan for the plan year by calculating the sum of the lives covered each day of the plan year and dividing that sum by the number of days in the plan year.
• Snapshot Method – A plan sponsor may determine the average number of lives covered under the plan for the plan year by adding the total of lives covered on one date in each quarter (or an equal number of dates for each quarter) and dividing the total by the number of dates on which a count was made.  For those plans that do not track the number of dependents, a “snapshot factor method” is available. Under the “snapshot factor method,” the number of lives covered on a date is equal to the sum of the number of participants with self-only coverage on that date, plus the product of the number of participants with coverage other than self-only coverage on the date and 2.35.
  • Note: The Treasury Department and IRS developed the 2.35 dependency factor in consultation with economists and plan sponsors.
  • Please see the final regulation for examples demonstrating how to run the calculations.  §46.4376-1(c).  These examples are very helpful.

• Form 5500 Method – The final rule sets forth a method to determine the average number of lives using the information from the Form 5500, with adjustments for dependents.  A plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of participants reported on the Form 5500, provided that the Form 5500 is filed no later than the due date for the PCORI fee.  The average number of lives covered under the plan for the plan year for a plan offering only self-only coverage equals the sum of the total participants covered at the beginning and the end of the plan year, as reported of the Form 5500, divided by two.  The average number of lives for a plan offering self-only coverage as well as family coverage equals the sum of the total participants covered at the beginning and at the end of the plan year.

For fully-insured plans, see the final regulations for the methods to determine average number of lives.
If an employer provides COBRA coverage or otherwise provides coverage to its retirees or other former employees, do covered individuals (and their beneficiaries) count as “lives covered” for purposes of calculating the PCORI fee?
Yes.  These covered individuals and their beneficiaries must be taken into account in calculating the average number of lives covered.  Note: This Q&A was taken from the IRS webpage on PCORI.

Andy Willoughby

Senior Vice President & Chief Operating Officer
678 475 3606 – andy@groupresources.com

This electronic transmission and any attached document and/or file is confidential and intended for the use of the individuals to whom it is addressed. This communication may contain material protected by privacy Laws or regulations. Any further distribution or copying of this transmission and/or attached document or file is strictly prohibited. If you received this message in error, please notify the sender and destroy the message and all attached documents and/or files immediately. Group Resources is not liable for any use or misuse contrary to these directions.

For Healthier Employees and Healthier Businesses

September 15, 2017

Source: Excelsior Solutions

For more information on the management of specialty drug costs, please contact your account manager.
Andy Willoughby
Senior Vice President & Chief Operating Officer
678 475 3606 – andy@groupresources.com

This electronic transmission and any attached document and/or file is confidential and intended for the use of the individuals to whom it is addressed. This communication may contain material protected by privacy Laws or regulations. Any further distribution or copying of this transmission and/or attached document or file is strictly prohibited. If you received this message in error, please notify the sender and destroy the message and all attached documents and/or files immediately. Group Resources is not liable for any use or misuse contrary to these directions.

For Healthier Employees and Healthier Businesses

September 1, 2017

More Smaller Companies Are Self-Insuring Health Benefits
Source: MyHealthGuide, Sara Hansard (Health Care on Bloomberg Law)

Small and mid-sized companies are increasingly providing their own health coverage for employees instead of buying fully insured plans since Obamacare was enacted in 2010.

Workers in Self-Insured Plans Rising

Between 2013 and 2015, as a result of an increase in self-insured plans among small and mid-sized employers, the percentage of covered workers enrolled in self-insured plans increased from 58.2 percent to 60 percent, according to data from about 40,000 employers interviewed by the U.S. Department of Health and Human Services and compiled by the Employee Benefit Research Institute (EBRI).

Key Facts
The largest increases in self-insured coverage occurred in establishments with 100-999 employees, rising 21 percent from 33.6 percent of employees in 2013 to 40.5 percent in 2015, and among establishments with 25-99 employees, where the practice increased from 13.2 percent to 15.2 percent, a 15 percent increase.

Mercer Health & Benefits LLC, which provides health-care consulting and brokerage services, has also found increases in the use of self-funding among the employers it surveys annually, principal James Bernstein told Bloomberg BNA. Bernstein is based in Mercer’s Cincinnati office.

• The largest movement Mercer found was among midsize companies with 500 to 1,000 employees.
•  51% of those companies self-insured in 2014, while 66% did so in 2016.
• Employers in the Midwest led the pack with about 74 percent self-insuring, while fewer employers in the Northeast and West Coast self-insured because health maintenance organizations such as Kaiser Permanente are more prevalent there.

If you have any questions, please do not hesitate to contact me or your Group Resources Account Manager.

Andy Willoughby
Senior Vice President & Chief Operating Officer
678 475 3606 – andy@groupresources.com

This electronic transmission and any attached document and/or file is confidential and intended for the use of the individuals to whom it is addressed. This communication may contain material protected by privacy Laws or regulations. Any further distribution or copying of this transmission and/or attached document or file is strictly prohibited. If you received this message in error, please notify the sender and destroy the message and all attached documents and/or files immediately. Group Resources is not liable for any use or misuse contrary to these directions.

For Healthier Employees and Healthier Businesses

August 18, 2017

A Flexible Spending Account (FSA) plan is a benefit provided by an employer under which an employee sets aside a certain amount of their paycheck into a medical flexible spending account before paying income taxes.  Then, during the year, they can be directly reimbursed from this account for qualified healthcare, or pay for eligible expenses at the time they are incurred, using the optional TakeCare flex debit card.  The money may be used for common out-of-pocket expenses (deductibles, co-pays for prescriptions or office visits, amounts over dental limits, annual physicals, eye exams, eye surgery, glasses, orthodontics, etc.) that qualify for payment with flex benefit dollars.  The money is ready and waiting whenever it is needed – it’s that simple.

By taking advantage of this flexible benefits plan, the employee is able to hold on to more of their paycheck in a special, easily accessible account.  Once enrolled, the entire amount estimated for healthcare expenses for the year will be available on the first day of the health plan year.  Any contributions that are not used during the plan year may not be paid to the employee in cash, however, the plan may offer a carryover provision.

FSAs can also be established for dependent day care, parking, transit and adoption expenses.  With these optional accounts:

• A working parent can use their take care plan to cover the eligible expenses of child care;
• Employees can realize significant savings on adult and elderly care expenses for a qualified member of the family; and
• Transit or parking costs related to work may also be compensated under a take care flexible benefits plan.

It is simple for a participant to keep track of how much money is in their account through accessing www.myflexonline.com, or with the My Flex Mobile app (available in the Apple store and on Google Play).

The biggest advantage is the tax savings.  Every dollar set aside in an account reduces how much the participant pays later in income taxes.  Plus, it is possible to be reimbursed for qualified expenses that the participant may already be paying for.

For more information on the advantages of participating in a Flexible Spending Account plan, please contact me or your account manager.

Andy Willoughby
Senior Vice President & Chief Operating Officer
678 475 3606 – andy@groupresources.com

This electronic transmission and any attached document and/or file is confidential and intended for the use of the individuals to whom it is addressed. This communication may contain material protected by privacy Laws or regulations. Any further distribution or copying of this transmission and/or attached document or file is strictly prohibited. If you received this message in error, please notify the sender and destroy the message and all attached documents and/or files immediately. Group Resources is not liable for any use or misuse contrary to these directions.

For Healthier Employees and Healthier Businesses

August 11, 2017

Pharmacy News to Know
From: Excelsior Solutions

August 4, 2017

One subject that we often hear addressed is the pre-emption of state insurance law by the Employee Retirement Security Act of 1974 (“ERISA”).  We’ve recently come across two articles, that we have re-capped below, to shed some light on this matter:

What is ERISA & why was it enacted?

Congress enacted ERISA primarily to establish uniform federal standards to protect private employee pension plans from fraud and mismanagement.  ERISA applies to all employee pension, health and other benefits plans established by private sector employers (other than churches) or by employee organizations such as unions.  If they meet certain requirements employee plans are “ERISA plans” even if they offer benefits through state-licensed insurers.

Plans that ERISA regulates:

For health plans, federal law prescribes certain substantive standards: administrators’ fiduciary standards (to administer the plan in the best interests of beneficiaries), requirements for plan descriptions to be given to enrollees, reporting to the federal government, and certain minimum standards (“continuation” health coverage; group plan guaranteed issue and renewability; pre-existing condition exclusion requirements; nondiscrimination in premiums and eligibility; maternity hospital length-of-stay standards; post mastectomy reconstructive surgery; and limited mental health “parity”).

Who enforces and interprets ERISA?

The U.S Department of Labor is responsible for administering and enforcing the ERISA law and setting policy for the conduct of employee benefit plans.  The federal courts are the primary source of interpretations of ERISA’s preemption provisions.  Much of the uncertainty about whether ERISA affects a proposed state health care initiative or policy results from differing court interpretations of the preemption provisions across the country.

What self-funded employers need to know:

According to one prominent health law attorney, “Although in its text ‘hospital’ appears only once and ‘physician’ not all, ERISA may be the most important law [prior to the Affordable Care Act] affecting health care in the United States”.  William Sage, “Health Law 2000”: The Legal System and the Changing Health Care Market, 15(3) Health Aff. 9 (Aug. 1996).  Understanding the intricacies of ERISA and its preemption clause can be a challenge for even the most careful attorney.  Courts have held that ERISA supersedes some state health care initiatives, such as employer insurance mandates and some types of managed care plan standards, if they have a substantial impact on employer-sponsored health plans.  The Supreme Court has interpreted the preemption clause very broadly to carry out the congressional objective of national uniformity in rules for employee benefits programs.   The Court has held that ERISA preempts state laws that either refer explicitly to ERISA plans (i.e., all plans offered by private-sector employers) or have a substantial financial or administrative impact on them.  U.S. Supreme Court opinions limit ERISA’s impact on state authority, but many uncertain areas remain.

ERISA’s preemption provisions contain an exception important to state health policy that allows states to continue to regulate “the business of insurance” (authority that Congress gave to the states in McCarran-Ferguson Act of 1945).  Courts have interpreted ERISA’s insurance regulation “saving clause” to allow states to regulate traditional insurance carriers conducting traditional insurance business.  That clause is then qualified by the “deemer clause,” which acts as a kind of escape hatch through the savings clause.  For employers, that escape hatch is key because it allows them to avoid state insurance regulations by self-funding their health plans rather than by purchasing health insurance.

Under the insurance regulation saving clause, states can regulate terms and conditions of health insurance, for example, the benefits in an insurance policy or the rules under which a health insurance market must operate.  But through its so-called “deemer clause,” the statute prohibits states from regulating plans that “self-insure” by bearing the primary insurance risk, even though by bearing risk they appear to be acting like insurance companies.  According to the Society of Professional Benefit Administrators, approximately 75-80% of employees and their dependents receive benefits through self-insured group health plans sponsored by their employers.

Increasingly, however, states are testing the limits of preemption. Recent examples include, leave laws which mandate that employers continue health insurance coverage for eligible employees out on leave. Perhaps the best known leave law is the Federal Family and Medical Leave Act of 1993 (“FMLA”).  The statute, like most other Federal laws applies regardless of the source of insurance.  It requires employers to provide twelve weeks of unpaid, job-protected leave for an employee’s own serious health condition, for the birth or adoption of a child, or to care for a spouse, parent or child with an illness.

When determining whether preemption under ERISA is applicable, the key question to answer is whether the state law at issue  “relates to” an ERISA plan.  The U.S. Supreme Court has said that a state law “relates to” an employee benefit plan covered by ERISA if it refers to or has a connection with that plan, even if the law is not designed to affect the plan or the effect is only indirect.  See e.g., Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990).

If you have any questions, please do not hesitate to contact me or your Group Resources Account Manager.

If you’d like to review the original articles, please follow the links below:

1. http://www.nashp.org/erisa-preemption-primer/
2. https://issuu.com/sipconlinepub/docs/self-insurer_aug_2017

Andy Willoughby
Senior Vice President & Chief Operating Officer
678 475 3606 – andy@groupresources.com

This electronic transmission and any attached document and/or file is confidential and intended for the use of the individuals to whom it is addressed. This communication may contain material protected by privacy Laws or regulations. Any further distribution or copying of this transmission and/or attached document or file is strictly prohibited. If you received this message in error, please notify the sender and destroy the message and all attached documents and/or files immediately. Group Resources is not liable for any use or misuse contrary to these directions.

For Healthier Employees and Healthier Businesses