Mais conteúdo relacionado Semelhante a Health Care Reform: Connecting the Present to the Future (20) Mais de Doeren Mayhew (13) Health Care Reform: Connecting the Present to the Future2. The Stages of Death and Dying and
Health Reform
Copyright © 2014.
3. Election 2016 – Charting a Political
Course
• Hillary in 2016
• Democrats maintain a majority in the Senate (but not super
majority)
• Republicans retain control of the House
• 2018 will be interesting as “Cadillac Tax” begins to erode the
deductibility of benefits for the employers offering “rich” benefit
plans
• What does it mean?
a.
b.
c.
Repeal is unlikely
Torrent of back tracking and clarifying regulation in the coming years
Legal challenges continue
i.
ii.
d.
Challenging pieces of the law as opposed to the entire law
States digging in support/undermine
Republicans may try to change smaller pieces of the law through the
legislative process (i.e., negotiations on budgetary issues)
Copyright © 2014.
4. Meanwhile, What’s Happening in the
Health Care System?
•
Healthcare systems will continue to integrate as reimbursement reforms shift
from fee‐for‐service to value‐based and bundled reimbursements.
•
Hospitals will shift to outpatient care and seek to reduce operating costs by as
much as 20% through technology adoption and process improvement.
•
Primary care (PCP) including retail and on‐site clinics, telemedicine, nurse
practitioners and physician assistants will serve as gate keepers to triage care.
•
As new insured enter the system, PCP shortages will occur in rural areas resulting
in higher ER use and sparking investments in urgent care. As many as 90m
Americans covered under Medicare, Medicaid and individual insurance will make
new buying decisions. Our current decade will be touted as “the decade of the
consumer.”
Copyright © 2014.
5. Health Reform Will Fundamentally Alter
Entitlements
•
•
169m non‐elderly Americans fall within these FPL boundaries.
Over 75% are covered by some form of employer sponsored insurance.
Persons in family/household
100% FPL
400% FPL
1
$ 11,170
$ 44,680
2
$15,130
$60,520
3
$19,090
$76,360
4
$23,050
$92,200
5
$27,010
$108,040
6
$30,970
$123,880
7
$34,930
$139,720
8
$38,890
$155,560
For families/households with more than 8 person, add $3,960 for each additional person
2012 FPL for 48 Contiguous States and District of Columbia. Dept. of Health and Human Services
http://aspe.hhs.gov/poverty/12poverty.shtml (as visited 11.7.12). See website for information on Alaska
and Hawaii.
Copyright © 2014.
7. The Executive Dashboard
HR Must Be “Friend AND Fiduciary”
Per Capita Medical Costs
Healthcare Cost Impact on ABC Company
Annual Premium
$14,329,777 (1)
Company Per Capita Healthcare Costs (PEPY)
$11,473 (2)
Peer Group #1 (PE advisor group)
Healthcare Costs (PEPY)
$14,060
Annual Revenues
$ 720,000,000
Peer Group #2 (law firm)
Healthcare Costs (PEPY)
$13,070
Per Capita Revenues
$ 576,461 (1)
Peer Group #3 (Consulting Firm)
Healthcare Costs (PEPY)
$16,065
Per Capita Profit (17%)
$97,998 (2)
Average EE Share
21%
Average EER Cost
79%
Net Employer Per Capita Cost For Healthcare
$9,063
Healthcare as a % of Per Capita Profit
9.2%
(1) Includes
claims, retention and reserves
(2) Average per capita cost of ABC Company
• Solutions:
• Per Capita Projected Savings (2)
• Solutions Savings as a Percentage of Net Employer Costs:
•Revenue Required to Drive Additional EBITDA:
(1) $ / .17 profit margin
$ 1,859,331
$1,488
13%
$10,937,241
1)
2)
Estimated annual revenue against April enrollment
Estimated profit margin against revenues
(2) savings estimates / # of employees
Copyright © 2014.
9. Your Financial Strategy Drives Your Benefits
Structure – Whether You Admit it Or Not
Benefit Philosophies will be influenced increasingly by financial performance:
•
“No disruption”: Per capita medical spend < 20% of per capita profit
•
“We’re open to doing more”: Per capita medical < 50% of per capita profit
•
“We need to reduce costs”: Per capita medical < 75% of per capita profit
•
“We want out”: Per capita medical ≥ 100% of PEPY profit
There is a growing tension between Finance and HR as the disruption and
administrative hassles of engaging employees clashes with the financial realities
of a low organic growth economy. What is the cost of not taking more aggressive
action?
Copyright © 2014.
10. Radiology – Selling $18,000 of shovels to pay
for one point of service decision
•
Employee A receives MRI at 90% of $3000 while employee B receives a
$1000 MRI also at 90% at an outpatient facility.
•
Employer pays $ 2700 for A and $900 for B. Company operates at 10%
profit margin which means they must sell $18,000 of goods and to cover
Employee A’s decision to fly ‘first class’ at point of service.
Copyright © 2014.
11. You Want Trends Equal Or Lower Than Your
Rate of Revenue Growth? Have a Plan….
1. Cost shift to employees through contributions, and/or benefit reductions –
“Peanut butter spreading” does not work.
2. Reduce insurance cost through aggressive negotiations and thorough underwriting
practices – How much risk do you want to retain and how much will you transfer?
It is more expensive to transfer risk than retain it. The average insured premium in
2014 will be 8% higher than its self funded equivalent due to taxes, fees and risk
charges.
3. Reduce unit cost of services –review network discounts, adopt narrow networks to
exclude outlier providers, engage employees for ambulatory services to become
better consumers through high deductible plans, utilize cost transparency tools
and engagement incentives. Outsource and unbundle discreet services such as RX,
Stop‐loss and Care/Disease management.
Are you really doing all of these things?
If not, why not?
Copyright © 2014.
12. You Want Trends Equal Or Lower Than Your
Rate of Revenue Growth? Have a Plan…
4. Reduce intensity of services during an episode of care through review and
management (focus on reducing waste and overtreatment) – Insurers have not
done a strong job at managing the intensity of services while individuals are
hospitalized. Intensity will continue to rise. Who is rally providing care advocacy?
How do you measure and intervene?
5. Reduce consumption of healthcare by improving employee and dependent
health – focus on promoting primary care, finding asymptomatic illness, reducing
potential for at risk becoming chronically ill, stabilizing chronically ill through gaps
in care management to prevent catastrophic claims. Adopt incentive‐based
biometric plans. that includes health risk assessments.
What’s harder? Implementing biometric testing and population health
management incentives … or firing ten people because earnings are flat?
Copyright © 2014.
13. So, What’s Your Plan?
•
1. Engagement ‐ You bend medical trend ‐ ( Aggressively manage insurance
and unit costs and seek to reduce consumption and improve health. Make
your team accountable to achieve low single digit trends WITHOUT making
benefit cuts and increasing contributions
OR
•
2. Define Your Contribution – You look for a way forward using a single
carrier or group exchange ( Cap contributions, offer at least eight plan options
and have the discretion to subsidize rising annual costs based on corporate
performance)
OR
•
3. Disengage – Look for a way out by migrating people into public exchanges.
(Do the math and gravitate to the lowest cost option which may include
dropping coverage or failing the ACA affordability test to make employees
eligible for subsidies)
Copyright © 2014.
15. Strong HR Fiduciaries Manage Healthcare Trend
Without Increasing Contributions or Cutting Benefits
•
Find and Engage Asymptomatically Ill
a.
Improve preventive visits – focus on age/gender‐specific goals
b.
Make biometrics mandatory
c.
Reduce ER usage by increasing PCPs
•
Reward Engagement
a.
Implement wellness and smoking cessation engagement incentives
b.
Focus on closing gaps in care for prevalent disease states
c.
Discuss “at risk” population (i.e., hypertension or diabetes)
•
Encourage Consumerism
a.
Introduction to consumer tools
b.
Focus on high utilization ambulatory services such as imaging and orthopedic
c.
Introduce HDHP with Health Savings Account
Copyright © 2014.
16. Achieving Trend Improvement Without
Takeaways (Cont.)
•
Improve Chronic Disease Compliance
a.
b.
c.
d.
•
Ensure Competitive Unit Cost
a.
b.
c.
•
Emphasis on Rx compliance
Focus on gaps in care and improved condition compliance
Set performance parameters for DM vendor and measure
Focus on hypertension, diabetes and muscular issues
Re‐price your insurer’s claims
Review narrow network alternatives and ACO models as they emerge
Underscore consumer tools and highlight unit cost disparities in communication.
Understand That No Change Means No Change
a.
b.
c.
The hassle of moving carriers versus the hassle of higher costs
The fear of self funding and the administrative complexities of new solutions
Rethinking your advisor – have you intellectually outgrown them?
Copyright © 2014.
17. The Five Pillars of Zero Trend
Unit Cost
Accountability
•Understand network
economics
•Consider differences in
carrier networks
•Ask about % of contracts
that use capitation and
bundling vs. fee‐for‐
service reimbursement
•Young average age
populations should be
less obsessed with a
500bp difference in
network economics
subsidize
•Employees:
‐ Reduce consumption
by improving
ambulatory
consumerism
‐ Introduce HDHPs and
HSAs
‐ Enforce the notion of a
social contract
•Dependents:
‐ Reduce consumption
through Biometrics/
age/gender‐based tests
•Providers:
‐ Pick fights when
necessary
‐ Open access PPO’s and
co‐pays must die
Population Health
•Biometric Testing at
PCP, not on‐site
Care Management
•How does carrier
intervene with
chronically ill?
•Find asymptomatic ill
•Force chronic disease
compliance to close gaps
in care with at
chronically ill and
unstable
•Manage “At Risk” by
forcing engagement
•Are base line biometrics
improving?
•Consider third‐party
vendors to drive
improved engagement
and close gaps in care
Transparency
•Use third‐party
consumer tools
•Use HDHP Plus HSA as
default plan
•Consider RBRVS
schedule for elective
procedures
•Convert to PEPM fees
for all vendors
•Charge smoking
surcharges and use
maximum incentives for
activity and compliance
based wellness designs
•Vendors:
‐ Performance
guarantees focused on
results
Are you motivated and properly resourced to commit to achieving zero trend?
Engaged employers average as much as 10% lower annual trend
Copyright © 2014.
18. Preventive Care Utilization: Find The
Asymptomatic Illness
•
Significant increases in percentage of adult well visits.
Mammograms for Ages 40 and up
Preventive Services
Total Monitored
Healthy People
Compliance Rates
Members
2020 Target*
Cervical Cancer Screening
533
76%
93%
Breast Cancer Screening - Mammography
474
66%
81%
*from Healthy People 2020 HHS Strategies
Wellness Visits
Well Baby Visits
Well Child Visits
Age 1-4
Age 5-11
Age 12-17
Well Adult Visits
Age 18-39
Age 40-64
Age 65+
Total Wellness Visits
Females
Males
www.healthypeople.gov/2020
Current
92.7%
66.0%
82.8%
68.3%
60.6%
56.6%
45.3%
63.1%
55.0%
59.0%
60.8%
57.3%
Trend
+9.8
-0.4
+3.0
+0.2
-1.0
+18.9
+10.8
+23.0
+26.2
+15.0
+7.7
+21.5
UHC BOB
88.7%
50.6%
72.7%
48.4%
42.4%
31.1%
27.5%
34.7%
27.3%
36.6%
45.8%
27.3%
Current Period: 1/1/12 – 12/31/12 (Paid through 2/28/13)
Prior Period: 1/1/11 – 12/31/11 (Paid through 2/29/12)
Norm: UHC Book of Business
Copyright © 2014.
20. Unit Cost: All Networks Are Not
Created Equal
•
Many insurers maintain more than one PPO network. Some give their inferior
economics to self funded clients using third‐party administrators or to smaller
self‐insured customers. How do you know you have the best economics?
•
Narrow network plans should save more money. Criteria for high‐performance
networks vary based upon complex algorithms of optimization over an entire
“service episode of care” and “unit cost.” Are higher unit cost providers in
your High Performance Network?
•
Some major hospital systems make it contractually difficult for insurers to
exclude them as two star providers in their high performance networks.
Every insurer obfuscates their actual discount percentages and efficiency
criteria making it difficult for employers to understand where quality is truly
occurring.
Copyright © 2014.
21. Unit Cost: The Games People Play
• Pushing “In‐network” benefits is not always good: Hospital facility
charges are often in‐network while outpatient surgical centers are
often non‐network.
Example: A colonoscopy performed in a non‐network setting will
cost employers less than in‐network at a hospital. In this case, the
plan pays the hospital a $3,000 facilities fee at 90%, versus paying
70% of $1,500 for the outpatient facility. Many outpatient groups
will waive balance billing.
• Carriers may misrepresent their average discounts by increasing
allowed charges to create a greater spread on billed versus
allowed charges. Some insurers will remove capitated claim costs
and claims exceeding the stop‐loss from their discount calculations.
Others refer to average discounts instead of specific by facility
trends.
Copyright © 2014.
22. Unit Cost Isn’t Everything When
Demographics Are Good
•
The lowest average discount is not always best: Younger populations have lower inpatient
consumption. While an inferior PPO plan will lag in hospital, RX and behavioral unit costs, a
young population won’t use these benefits at normative levels
Discount at
Hospital
Spend as a %
of Claims
Actual Cost (1)
Cost of other
insurance +
admin (2)
National
Carrier A
50%
20%
$4M
$6.8M
TPA & Rental
Network
Carrier B
40%
20%
$4.8M
$4.8M
(1)
$40M spend on billed charges, $8M spend on in patient facilities charges, 4000 lives
(2)
Carrier A admin is 17%, Carrier B admin is 12%
Copyright © 2014.
23. Self Insure: Cost-Shifting will be More
Prevalent Under Insured Plans
•
Self insurance could significantly grow in popularity as employers seek:
1. Greater transparency of claims
2. Question bundled insurer practices
a.
b.
c.
d.
3.
4.
5.
6.
Capitation payments to subsidiaries such as pharmacy and behavioral health
Capitation payments to providers
Efficacy of disease management and medical management
Discounts
Avoidance of fees passed on by insurers
Avoidance of state premium taxes
Avoidance of state mandates
Ability to contract directly with ACO’s?
We believe the simple act of self insurance may reduce fully insured costs by as much
as 10% by 2014. Employers need to get over their fear of financing their own risks.
Copyright © 2014.
24. Stop Loss: Games People Play
Buying stop loss insurance can be tricky! There are claim exposures and
hidden costs that should be evaluated to make sure the company has the best
coverage at the best price. Here are just a few games we see in the market.
• Specific lasers on large ongoing claims
• Non renewal for bad claim experience
• Increased margin requirements with national carriers (CUBA)
• Immature Aggregate/Specific (12/12) written in consecutive years
• Pharmacy excluded from specific stop loss coverage
• Layering – Who really holds the risk on your large claims?
Copyright © 2014.
25. RX Economics: A Prescription for Profit
•
Opaque Pricing Rules Most RX Plans: The amount the PBM pays the pharmacy for a drug is
lower then what is charged as a claim to the employer. The discount off avg. wholesale price
(AWP) from the PBM determines the spread made by the pharmacy manager.
•
Focus should be on lowest net cost per script, not rebates. Getting a rebate check is the
equivalent of habitually overpaying the IRS each year and then expressing delight with your
refund. Many RX purchasing coops include non disclosed fees and rebate based reimbursement.
Employer fixation with rebates has led to mark‐up/discount sleight of hand.
•
Talk About Heartburn: $ 260 per script Proton Pump Inhibitor cost of “Nexium” versus over the
$15 over the counter “Omeprazole.”
•
Your insurer will use RX rebates to “buy‐down” administrative fees to give the appearance of
competitive pricing – essentially using your money to appear more aggressive. Insured
employers typically cannot unbundle RX.
•
Employers should utilize a PBM with pass‐through pricing that includes no spread.
Copyright © 2014.
26. What is More Disruptive: Engaging
Employees or Firing Them?
•
Who Is Really Disrupted When You Make Change: 20% of employees drive 80% of
claims. 70% spend less than $500. If you need to find savings, what’s more
disruptive – firing workers or focusing on reducing claims consumption by
changing behavior?
•
Your large claims will arise out of:
1. Asymptomatic illness going undetected.
2. Chronically ill employees not receiving treatment to stabilize their conditions.
3. At‐risk employees continuing lifestyle decisions that deposit them into
chronically ill bucket.
In a period of low organic growth and double digit profit expectations, expenses
will be realized through lower per capita healthcare spend or lower FTE counts
Copyright © 2014.
28. Strategic HR/Finance Planning
Questions/Considerations
1. Does HCR represent a challenge or an opportunity for our organization?
2. Will HCR require us to make significant changes?
•
•
•
•
•
•
How we offer benefits?
To whom we offer benefits?
What benefits we offer?
How much the benefits cost?
How we administer benefits, payroll, employee communication … ?
How will our employees and families be affected?
3. How do the revisions required by HCR fit within our own benefits philosophy/strategy? How
does the rate of growth of healthcare track with our rev and EBITDA assumptions?
4. What do we expect other players in our industry will do with the respect to HCR?
•
•
What impact will there be to our competitive position?
Do we manage to effect superior results?
5. Should we consider changes to our benefits strategy and overall compensation model?
6. Are we prepared internally to support the changes needed?
7. Do we understand how public exchanges will develop in our state and for all our locations?
Will plan designs vary dramatically from current commercial plans?
Copyright © 2014.
29. Who Will Receive The Subsidies?
Premium Tax Credit Methodology and Eligibility Criteria
• Government pays some of the
premium for exchange‐based
Household
coverage:
Income FPL
a. Sliding scale depending on
income
Up to 133%
b. Based on silver coverage
• Available to individuals between 100% ‐
400% of FPL who:
a. Are not eligible for minimum
essential coverage or
b. Are eligible for minimum
essential coverage through an
employer, but that coverage is
unaffordable or does not
provide a minimum value
Initial
Premium
Percentage
Final
Premium
Percentage
2%
2%
133% up to 150%
3%
4%
150% up to 200%
4%
6.3%
200% up to 250%
6.3%
8.05%
250% up to 300%
8.05%
9.5%
300% up to 400%
9.5%
9.5%
Copyright © 2014.
30. Risk Mitigation vs. Opportunism – Avoiding
Penalties or Arbitraging Reform?
•
Restructure work schedules as permitted.
•
W‐2 safe harbor – offer self‐only coverage does not exceed 9.5% W‐2 wages.
•
Reduce main medical offering to penalty avoidance level.
a.
Base and buy‐up structure. Auto enroll into base plan.
b.
Dependent participation drives an additional 11% of annual healthcare
costs. Cover single employees and offer coverage to dependent children.
•
Implement coverage that may be unaffordable for some or all FTEs – triggers a
lower $3,000 penalty – only for those who go to exchanges. Use aggressive
wellness incentives to drive non compliant employees to public exchanges.
•
Explore use of defined contribution designs to cap your liability.
Copyright © 2014.
31. A Word Regarding Public Exchanges
•
Public exchanges will offer community rated metallic plans that will be tightly regulated
and priced. Expect public fights between insurers and regulators. Plans are backstopped
the first few years. False positives in early years followed by reality.
•
Insurer plan designs will differ from traditional employer‐sponsored plans – using gate
keeper, narrow networks and other mechanisms to reduce rates. Major carriers are
participating on a limited basis within exchanges.
•
There is risk associated with adverse selection. Who will be first to join exchanges? It
appears that a larger percentage of first buyers are older Americans. Will the penalty for
failure to buy insurance drive healthier individuals into exchanges? As of 1/1/2014,
2.2M have joined exchanges across the US ‐‐ well below the Administration’s target.
•
Individuals will need significant education and guidance to make buying decisions in the
public exchanges when migrating from private plans. Most employers are waiting until
2015 or 2016 to judge the viability of the exchange benefits, pricing and consumer
experience.
Copyright © 2014.
32. Defined Contribution Plans and Exchanges:
Back to The Future With Better Technology
Its our belief that the majority of employers will adopt some form of defined contribution basis of financing their
benefits by 2020. A certain percentage of larger employers ( over 5000 employees) will consider joining private
exchanges in lieu of managing their own single carrier multiple option plan.
Copyright © 2014.
33. Private Exchanges: Consultants becoming brokers,
brokers becoming consultants and clients confused
•
Aon/Hewitt: Fully insured, group underwritten exchange attempting to extract
best in class pricing from multiple insurers over twenty discreet markets.
Hypothesis is true competition can only happen when risk is transferred.
•
Towers: Purchased Extend Benefits for Retirement and larger employers plans.
Purchased Liazon Benefits to offer private labeled solutions to the middle market
employers and their advisors.
•
Mercer: Multi‐carrier exchange for employers of all sizes.
•
National Advisory Firms: All launching or announcing some version of a defined
contribution enrollment capability or a multi‐carrier exchange.
Expect insurers to launch their own “stores” in 2015. Employers will have to try to navigate a
crowded dance floor of self interested advisors and vendors – all wanting to promote their B2B2C
purchasing facility. Everyone will be using the term “exchange”….
Copyright © 2014.
34. Considerations For Defined
Contribution Plans
1.
Cafeteria plans failed in the 1980’s and 1990’s due to administrative
complexities and adverse selection that eroded choice over time.
2.
Technology through on‐line enrollment and decision support has reduced
administrative complexities. Employees like choice – just not too much
choice.
3.
Adverse selection risk is still real as low utilizing, young employees opt for
lower cost options, savings are redirected to take home pay, 401(k) or
alternative benefits. Fewer medical premiums to offset same claims can
result in spiraling cost of plan choices.
4.
Employers may lose interest in affordability and advocacy. The rising cost
of healthcare could be viewed as an economic fact of life similar to
inflationary cost increases in energy. and food. Who will intervene on
behalf of unhappy employees?
Copyright © 2014.
35. Defined Contribution and Private
Exchanges – A Trend or Hype Cycle?
An exchange is the nail, your strategy is the hammer – not the other way around.
Source: Gartner Group Hype cycle indicators model adapted to exchange cycle
Copyright © 2014.
36. Resources Required to Run the Race: It’s Not
Your Daddy’s Benefits Plan Anymore
•
•
•
•
•
•
•
•
•
Communications – SBC requirements, exchange notification, reform education, plan changes ‐
what is your theme?
Employee advocacy, engagement and education – Enrollment, plan changes, issue resolution and
support – Who will intervene on their behalf?
Actuarial / underwriting – Contribution setting for plan options, scenario modeling, plan option
forecasting, budge assumptions and funding analysis – Do you know what your trend goals are and
how costs impact profits? Do you understand self insurance?
HR Administration – Do you want to outsource, co‐source or contract elements of HR
administration to third parties – Are you stuck being tactical when you need to be strategic?
Pharmacy – Carrier and large PBM models are broken. Insurers using rebates to offset their own
administration costs – What is your true Rx trend?
Compliance – HR and employment laws will continue to become more complex. ERISA will change
and be challenged – Who is your legal resource?
Healthcare reform modeling and scenario planning – Discovery of risk exposures, review of
financial exposures, modeling based on employment and design changes – Will reform happen to
you or for you?
Clinical – What are the controllable utilization trends in your health plans? Is your carrier fulfilling
their administrative duties to impact consumption trends? What current and forecasted cost arising
from?
Population health – Premium differentials, incentive plans – Can I change behavior?
Copyright © 2014.
37. Human Resources and Finance:
Hang Together or Hang Separately!
•
•
•
Force your C‐Suite execs to engage. Communicate to your entire senior management team
on what you are doing and why – they are often your biggest utilizers, complainers and
point of contact for employees.
Don’t waste a crisis – use the ACA and reform as air cover to drive fundamental changes
necessary to “preserve” your ability to offer employer sponsored benefits.
Create a roadmap and set goals. set goals:
a.
Question the value of your vendors and hold them to measurable standards. In a
period of low healthcare consumption, a 6% increase is nothing special. Your goal
should be zero trend!
b. Your rate of medical cost growth cannot increase faster than your revenues or you will
have margin dilution that is often offset by headcount reductions.
c.
If your growth is flat and margins are under pressure, remember that it is more
disruptive to fire employees than it is to make changes to your plans that will force
employee engagement and overdue accountability for anyone responsible for
managing your plans.
Copyright © 2014.