New Proposed Rules for Wellness Programs

New Proposed Rules for Wellness Programs

New Proposed Rules for Wellness Programsweights.pngIn another step forward to  ncentivize wellness new proposal can give discounts for managing good health much like good drivers with auto insurance.New proposed rules issued under Health Care Reform address certain amendments to the nondiscrimination requirements for group health plans offering a wellness program to comply with the federal Health Insurance Portability and Accountability Act (HIPAA).Specifically, the proposed rules would increase the maximum permissible reward under a wellness program that requires an individual to satisfy a standard based on a health factor in order to obtain a reward, from 20% to 30% of the cost of coverage (and to 50% for programs designed to prevent or reduce tobacco use). The rules also include other proposed clarifications regarding the requirements for such wellness programs to avoid prohibited discrimination, including reasonable design and reasonable alternatives that must be offered for individuals to obtain the reward.Other Proposed Rules Released Under Health Care Reform
Separately, new proposed rules have been issued for health insurance companies regarding the law’s requirements related to guaranteed availability of coverage and essential health benefits.

  • Under one set of proposed rules, issuers offering non-grandfathered health insurance coverage in the individual or group market would be required to accept every individual and employer that applies for coverage, with limited exceptions. Issuers in the individual and small group markets would be allowed to vary premiums within limits, only based on age, tobacco use, family size, and geography.
  • Another set of proposed rules outline issuer standards related to coverage of “essential health benefits.” Essential health benefits are a core set of items and services that must be covered by non-grandfathered plans in the individual and small group markets beginning in 2014.

While its always been known a healthy living for employees makes a productive employee.  Large businesses have benefited from a healthy work force as they can better afford programs and have a direct rate reduction in rates.

Although employers continue to use cost shifting to control health insurance expenses, many companies are also making wellness programs part of the overall strategy to keep costs down by keeping staff members healthy.“Our entire health care system is organized around treating diseases after they occur, not preventing them before they occur. We need a paradigm shift that places prevention at the center of our health priorities.” – Lynn C. Swann, Chairman, President’s Council on Physical Fitness and Sports

The new proposed rules would apply for plan years beginning on or after January 1, 2014. An overview of the proposed rules is available on Our Summary by Year offers updates on other requirements related to Health Care Reform.

NY Ranks Health Insurers Based on Complaints

NY Ranks Health Insurers Based on Complaints

So how does your Health Insurance Company rank? Click here to find out.

“Each year, NYSID and DOH receive complaints about health insurers from consumers and health care providers. After reviewing each complaint, the State determines if the health insurer acted appropriately. If the State determines that the insurer did not act in accordance with their statutory and contractual obligations, the health insurer must resolve the problem”

According to the report, a better rank means that the health insurer had fewer upheld complaints, relative to its size. If the ratios are the same, the health insurer with the largest premium is ranked higher.

As usual the leading insurers with the most market share rank in the middle.  The #1 insurer based on membership, Empire Blue Cross, received # 6 ranking.  Highly regarded Aetna got # 8.  Using this as a gauge, highest ranked insurers such as MVP, Independent Health and Community Blue (Healthnow) ought to be the way to go. As an example, local Mid Hudson Valley privately owned MVP had 117 complaints with just 7 upheld or 6%.

The numbers would suggest that the smaller size of an insurer the better they are at customer service and reducing complaints. This is unfortunately contrary to what we are seeing in the industry.  Health Net has existed the northeast recently, GHI and HIP merged to form Emblem, Oxford was taken over by United Health Care and Empire is owned by Anthem and no longer a non profit.   We are seeing recent examples of this turned outside the region as well.  Moody’s, New York, points to recent notifications that Blue Cross Blue Shield of Delaware, Wilmington, Del., signed an affiliation agreement with Highmark Inc., Pittsburgh, and that HealthSpring, Nashville, Tenn., agreed to acquire Bravo Health, Baltimore.

So how does an MVP afford to invest in technology and new products? Regulators may frown on the big boys from swallowing them up but its a good guess that new affiliations with similarly sized small companies will be shaping the future landscape of private Health Care.

Empire & Stellaris Reach Pact effective 8/1/10

Empire & Stellaris Reach Pact effective 8/1/10

The showdown is over and 45,000 Westchester Empire Blue Cross residents can now breathe a sigh of relief.  The majority of the Westchester hospitals belong to this network – Lawrence Hospital Center,Northern Westchester Hospital, Phelps Memorial Hospital Center and White Plains Hospital Center.

While these hospitals were covered on emergencies and the physicians were unaffected it still posed an inconvenience.  physicians were rerouting patients to participating hospitals such as Westchester Medical Center in Valhalla.

As I posted in prior blogs these tight negotiations will be the new norm as regional hospital systems have logically evolved to gain leverage in the market.  Unlike in past negotiations this one has been a thriller as contracts have not been renewed since April 1.  The PR campaign was heavy on both sides with political pressures coming down form the State, board of directors and passionate letter writing campaigns.

Ironically we are seeing the opposite trend from insurers who are building smaller networks focused on smaller  regional hospitals and medical centers.  The article in NYT, Insurers Push Plans That Limit Choice of Doctor, discusses how this model may possibly work in the new Obama Care.  Many may be willing to make network concessions with savings of 15%.  We are seeing this trend already with offshoots from insurers such as a 5 Boroughs plan – Aetna NYC HMO, Atlantis and Emblem CompreHealth HMO.  We expect Empire and Oxford to come out with something similar.  Our clients will be closely monitoring these networks.

So in an odd twist a Stellaria Hospital system may be the only hospital a Westchester resident can go to with a possible NYC hospital systems alliance such as Columbia Presbyterian Hospital/New York Cornell.

Either way Empire residents here will be sleeping soundly knowing that they are not limited, for now.

Boston Uprising?

Boston Uprising?

The people have spoken it seems as Democrats lost a key Senate seat occupied for nearly 50 years to Republican Scott Brown.  The irony of course is that Massachusetts  is a progressive state taking the lead in health care reform.  The state has had mix success with reform.  According to a article the the real danger of reform is that regulators keep adding mandates and reforms that adds to the costs.

Small businesses are struggling in this uncertain economy and are fearful of regulators.  NYS has already added a sales tax in Summer of 2009 and almost passed a second surcharge in the Fall.  The real concerns are  costs and the Health Care Reform Bill barely touches 1.5%/year savings over 10 years,

Flaws in the Reform Bill are that people can choose to go uninsured and come back on when they’re sick without a pre-existing condition waiting period.  This adds to the cost as someone could defray costs by not paying into the system and just buy back into it as needed.  Imagine if we can do that with Auto Insurance? With so many progressive state programs for low income the people most commonly winging it are high middle income and younger people.

Secondly, the sole prop and individual markets in state such as NY are unaffordable.  This is the soft underbelly of the system that we also see as going uninsured especially with so many out of work employees who are working as 1099 consultants.  Extending COBRA to 36 months from 18 months staves this problem somewhat.  Perhaps extending COBRA even further may work as well even with a small added premium to extend form 36 month 60 month would still be a saving.  For example, a single NY non group HMO is $1000/month vs. $400/month for a group plan.

Finally and most importantly is Malpractice and Tort Reform. You cannot discuss Health Care Reform without attacking this issue and The Reform Bill falls short of doing this.  The actual cost of Malpractice is less than we realize.  Malpractice costs account for only 1% of spending but this leads to another estimated 9% is for “defensive medicine”. According to JAMA– “Defensive spending is described such as ordering tests, performing diagnostic procedures, and referring patients for consultation, was very common (92%). Among practitioners of defensive medicine who detailed their most recent defensive act, 43% reported using imaging technology in clinically unnecessary circumstances. Avoidance of procedures and patients that were perceived to elevate the probability of litigation was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years, including eliminating procedures prone to complications, such as trauma surgery, and avoiding patients who had complex medical problems or were perceived as litigious. Defensive practice correlated strongly with respondents’ lack of confidence in their liability insurance and perceived burden of insurance premiums.”

WIll this shape up to be a repeat of 1994 and dismissed as another failed  attempt by Democrats?  Perhaps not, so long as premiums are rising 10-20% a change must take place.  The President’s singular focus on this issue has moved government to act this far is an a testament to his will.  No other president in 50 years has wanted to touch this controversial topic with a ten foot pole  Trying to accomplish this in his first term is hubris and a bit naive but at least we have something on the table.  A true bipartisan bill may be the most lasting in the long run.

Happy 2010!

Happy 2010!

Happy Holidays!

As we enter 2010 we want to include some timely information on year end health reform and its possible impacts.

Right before Christmas, The Senate has passed 60-39 its version of a health care reform bill that, if enacted, will impact your business benefits plan more than any federal law in the past half century.  The Senate’s bill must still be merged with legislation passed by the House before President Obama could sign a final bill in the new year.

Most measures are expected to take place in 2014.  As for the impact on small businesses, The Senate would exempt companies with fewer than 50 workers from having to offer insurance. The House excuses companies with annual payrolls of less than $500,000; firms that are bigger would pay a fee equivalent to a portion of their payroll costs if they don’t offer insurance. That payment would rise to 8 percent of payroll for the largest firms.

Brief Comparison of Senate and House Health Reform Bills

The 10-year, $871 billion health reform bill is designed to extend insurance coverage to 31 million uninsured Americans.

Barring any major changes, the final health care reform bill is expected to:

  • Require most employers to contribute to the cost of employee coverage or pay into a health fund, while small businesses would be exempt or receive tax credits.
  • Require everyone to carry insurance, with discounts for people who cannot afford it and penalties for people who refuse to buy coverage.
  • Create a new marketplace or “Exchange” for individuals and small businesses to comparison-shop for insurance.
  • Levy a new excise tax on high-value health plans.
  • Provide insurance discounts for those earning less than 400 percent of the federal poverty level (about $73,000 for a family of three).
  • Impose new restrictions on insurance practices, such as prohibiting the denial of coverage because of pre-existing conditions, and increase the Medicare payroll tax on high-income people.

Most of these changes will likely be phased in beginning of 2013 and continue up until 2016, although changes to health care Flexible Spending Accounts could occur in 2011. The legislation would place an annual limit of $2,500 on the amount of funds employees can contribute to FSAs.

For more on specifics and timing of the pending legislation, please see Health Care Reform Frequently Asked Questions for employers by clicking here.

It’s important to remember that any dramatic changes would not be immediate. However, there are some things employers can do right now in preparation for the passage of a bill. The most important of these are to stay informed, follow developments and involve your benefits staff and partners.

Employers may also want to begin evaluating their employee demographics and assessing their current health plan design.

  • Do you have a balanced health care plan?
  • Will you be subjected to the 40% “Cadillac Tax”?
  • Will you be subject to pay or play penalties?
  • Can you take advantage of Exchange options if low-income employees would receive greater subsidies?
  • What would be the overall impact to your budget?

Health care reform is estimated to cost between $890 billion and $1 trillion over 10 years. It would be paid for by a combination of savings to Medicare and Medicaid, along with new sources of revenue from tax changes.

Once a bill is signed into law, we will help our clients with the practical implications of the legislation and its potential impact to organizations.

Our agency has strived to be ahead of the curve and keep our clients within budget regardless. We realize your organization – now more than ever – needs up-to-date information, industry-leading expertise and the assurance a reliable benefits partner can bring to your business.   We thank you all for reading our material, referring us business and most of all believing in us!

Once again thank you and we wish you and your family a wonderful Holiday Season!

Boston Uprising?

Health Care Reform – Final House Bill Released!

Health Care Reform!3740711378_3b39509830

Americans woke up earlier today to the new Health Care Reform House Bill, “Affordable Health Care for America Act. HR 392”, which completes an important 1st step of 3 stages of a final bill.  While I didn’t quite make it through the 1990 page there are couple of items that stood out.

According to The Associated Press the Congressional Budget Office concludes that the  public option might actually cost consumers more than private coverage. The bill is expected to fetch close to $1 trillion dollars over 10 years. However, the bill could lead to $104 billion net reduction in deficit by spending cuts, revenue raisers and other bill provisions.


  • The bill would create a Health Insurance Exchange system that individuals could use to buy health insurance from private insurers and government-run plans.
  • The bill also would provide incentives for the creation of nonprofit, state-based health insurance cooperatives.
  • The public option plans would have to negotiate their own rates with providers, rather than using the ultra-low Medicare rates.
  • Individual responsibility: A “shared responsibility” section that would take effect in 2013 and covers both individuals and employers. The max tax for individuals would be either 2.5% of persons AGI or cost of average health insurance premiums.
  • Employer responsibility: would impose a tax equal to 8% of employee wages on employers over a minimum size that failed to provide health coverage. The payroll tax would be lower for employers with $500,000 to $750,000 in payroll, and 0% for employers with less than $500,000 in payroll costs.
  • Forbid plans from basing premiums or denials of care on factors such as pre-existing conditions, race, or gender.
  • Close the Medicare Part D prescription drug program “doughnut hole”.
  • Provide “affordability credits” to help individuals and families who meet income requirements pay their health insurance premiums, and provide health insurance subsidies for small businesses.
  • Require the secretary of Health and Human Services to negotiate drug prices on behalf of Medicare beneficiaries.
  • Expand Medicaid.

How will this be paid for? The new costs would be paid for according House Democrats by “making Medicare and Medicaid more efficient, imposing 5.4%  tax surcharge on individuals with adjusted gross incomes over $500,000 and married couples with adjusted gross incomes over $1 million; and adopting other tax measures.”

Our reaction is that without a greater focus on health care costs, families and employers will not be able to afford coverage. Health care has  tripled in a span of 15 years since 1984 to over $2 trillion and is expected to increase to $3.1 trillion by 2012.  Most uninsured have programs available that were absent when I was growing up. You can still be middle class and qualify for state subsidies.  Example for NYS  is Healthy NY for small businesses and sole prop. as well as Family Health Plus and Child Health Plus.

In the absence of tort reform, however, and an expected 21% reduction in Medicare reimbursement this will negatively affect providers.   In speaking with our client physician groups and national polls this could lead unintended consequences such 25% retirement and reduction of new physicians.  Could this lead to more prescribing privileges and responsibilities  for Physician Assistants, Nurses and Pharmacists?

Malpractice costs account for only 1% of spending but this leads to another estimated 9% is for “defensive medicine”. According to JAMA– “Defen

sive spending is described such as ordering tests, performing diagnostic procedures, and referring patients for consultation, was very common (92%). Among practitioners of defensive medicine who detailed their most recent defensive act, 43% reported using imaging technology in clinically unnecessary circumstances. Avoidance of procedures and patients that were perceived to elevate the probability of litigation was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years, including eliminating procedures prone to complications, such as trauma surgery, and avoiding patients who had complex medical problems or were perceived as litigious. Defensive practice correlated strongly with respondents’ lack of confidence in their liability insurance and perceived burden of insurance premiums.”

The issue of private competition is a big factor.  According to Kelly Loussedes, of National Association of Health Underwriters, “By injecting more competition into the insurance market, this might seem like an intelligent way to lower overall health care costs. A “public option” would simply shift health care costs onto private payers — and undermine the private insurance system”.   We question how real the private sector can compete with a public plan

however, well intentioned it may be.

In addition, most uninsured in progressive states such as NY are young people who elect not to pay now, illegal residents and people who earn over $50,000 but decide to opt out.  The issue how strong is the requirement for individuals to participate?  If its like Massachusetts with only a $1500 penalty or not enforced then this creates actually much more costs.

According to Mark Wagar President of Empire Blue Cross,  “fewer businesses and individuals purchase private coverage and enrollment shifts to high cost Medicaid coverage, further increasing State funding burdens. In turn, too many people delay needed services, resulting in increased costs for urgent care for hospitals and physicians when care becomes critical.”  He goes on to say that  in NYS where the non group individual market is unaffordable now  “The presence of an effective mandate – alone – would reduce the cost of individual coverage in New York by

over 60 percent and enroll 8 times as many New Yorkers in coverage than today because of improved affordability.”

Progressive countries such as Denmark and France have actually moved to private sector.  According to our client Lisa Halpern of Euro Center USA , which works with a Danish travel insurance company for expatriates, “Denmark’s public single payer system had to include the private sector starting more than 20 years ago.  This has become increasingly  popular in recent years  because the public had trouble accessing physicians without longer waiting times, diagnostics and private hospitals. The Private Insurance has also benefitted as a tax deduction for private companies offering additional health insurance.”

We support taking steps to lower costs as mentioned in prior newsletter
such as negotiating with drug manufacturers and implementation of healthcare cooperatives. On the other hand, we are wary of moving

too quickly on this road of reform and leading to unintended consequences.  As debate and legislation is clarifying that a public option is a probability we are concerned if this will lead to big government, wasteful spending, higher taxes and the specter of no private sector.

As the saying goes the madness is in the details. As a fellow business owner we ask that you join us in staying active with your local chamber, legislative rep., editorials and social media forums on this road to reform.  We have included some helpful links below.

Get Health Care Right!


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