While premium increases remain at pretty low levels, employees’ share of costs is increasing. In fact, that’s one reason premium increases are as low as they are. Without the higher employee premium contributions, deductibles and copays, premiums would have gone up a couple more points. According to Bloomberg, several factors are contributing:
- the Cadillac Tax – high-cost health plans will see a tax of 40% on the cost above $10k for individuals and $27.4k for families. This is leading some to increase deductibles and other cost sharing to keep premiums under the “Cadillac” level.
- Increasing cost-sharing keeps premiums lower – and lower premiums are more attractive to buyers. Deductibles now average above $1000; deductibles are up 67 percent over the last six years.
- And higher premium contributions are also a driver; on average workers are paying more than $1000 towards their coverage.
Consolidation among health plans continues, although there’s little evidence that it will lead to lower costs or better quality.
CEOs from Aetna and Anthem testified before Congress last week, with both touting the benefits of their pending acquisitions of smaller health plans. While it sure looks like the consolidation binge is concentrating power in the hands of a very few health plans, Anthem CEO Joseph Swedish claimed otherwise, stating: “health insurance is flush with competition…The number of health insurers increased by 26% in 2015 with 70 new entrants offering coverage.”
Not sure Mr Swedish’s claim accurately portrays the state of competition in health insurance, and the American Hospital Association and AMA certainly think it’s a bad thing. An analysis by the AMA indicates
The combined impact of proposed mergers among four of the nation’s largest health insurance companies would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states
While I am VERY skeptical about any analysis by the AMA, I believe that in this case they have a point. As one expert notes:
I’m aware of no peer-reviewed, published analyses that show that insurance mergers, on average, benefit consumers.
What does this mean for you?
Huge changes in the health care system will have far-reaching implications; watch for more battles between big provider groups and big payers, with smaller payers suffering fall out. This “fall out” will take the form of higher medical costs due to lack of bargaining power,
Fall is coming to Colorado’s Front Range, and Louise Norris brings the colors to Health Wonk Review.
Conflicts of interest, 2016 health insurance premiums, preparing for an OSHA audit – that and more await your viewing pleasure!
Monday we discussed the sleazier side of work comp services sales – payer decision makers with their hands out and the creative ways they profit from their positions.
Today, it’s back to a topic we covered years ago – fee sharing between services companies and payers – mostly TPAs.
It is no secret that almost all TPAs profit from managed care services – some by providing those services with internal resources, others from access fees paid by external vendors for the privilege of working with the TPA, still others do both.
That’s not a problem; TPAs have to make a profit, and their per-claim fees are under constant pressure from employers and brokers looking to demonstrate their ability to negotiate ever-better deals from their TPA.
Those per-claim fees are easy to measure, negotiate, and display. What’s much tougher to track are the costs of add-on services; bill review, network access, PBM, specialty managed care, case management, UR, litigation support, investigative services, MSAs, and on and on.
Almost all claims use some of these services, some use all. And when they are provided by external vendors (or internal suppliers, for that matter), the employer pays more. Again, that’s fine – these services add value (in most instances) and are needed.
What’s not fine is not disclosing the fee-splitting arrangements between the TPA and service providers. Actually, let me refine that – what’s not fine is telling employers no such splitting occurs when it does. Some TPAs tell their customers that they get paid by vendors, and aren’t going to disclose those payments. Again, that’s OK – employers know they are paying “extra” to the TPA for claims and related services, and they know they won’t find out how much “extra” that is. Caveat emptor.
And that happens – a lot more than you’d think, and in very creative ways. There are per-service fees, IT connection fees, rebates of fees, marketing fees, you name it – all kinds of descriptions of charges that increase costs for employers.
Some TPAs tell their customers there are no such arrangements, either outright lying or dissembling by creatively avoiding the question. They do this by interpreting the question as literally as possible. Thus the TPA can say “no we don’t get paid commissions” because the vendor pays the TPA an “IT connection fee.”
Kind of like Bill Clinton and his definition of “sex”.
So, what’s an employer to do? I’ll address that in detail later this week.
Here in the East summer is still in full force, no matter what the calendar says – but the work load has ramped up now that school is back in session and 2016 planning is well under way.
Two items of note that came across my virtual desk this week…
The latest data indicates premium increases for the benchmark silver plan in 13 key markets average 3.1% for those without subsidies, 1.0% for subsidized plans. Premiums decreased in 4 markets and increased in 9.
Access to care post-reform implementation doesn’t seem to be too problematic – at least not according to primary care providers. 80 percent said their ability “to deliver high-quality care” had stayed the same or improved; 20% said it had worsened.
The connection between diet and health is clear and strong, as is the relatively poorer health status of poorer people. A compelling piece discusses why the less-affluent have lousy diets – and it isn’t because they like Big Gulps and Cheetos. Here’s a key excerpt:
…participants are, by virtue of their qualifications, extremely pressed for cash. They eat fewer meals as a result, and select for more caloric foods, which tend to be less healthy, in order to adjust. Starch-heavy meals, fattier fare, and sugary foods all tend to be cheaper.
Part of it, however, might also be driven by the absence of free time to cook foods which require longer prep times (often vegetables). Convenience, in other words, can be a diet killer.
Before you criticize SNAP and belittle recipients, read the article.
California will have a drug formulary within 18 months. Expect this trend to expand pretty quickly. There are at least a half-dozen states seriously considering formularies with several others beginning to explore the concept and implementation thereof. One is North Carolina; I’ll be speaking at the NC Industrial Commission’s annual conference next month on the topic.
One observation – expect formularies and the rules and regulations that support enforcement thereof to evolve quickly from the Y/N model to a much more sophisticated form.
Got to get back to it – September is a very busy month!
A crazy week indeed.
Here’s a few of the more striking things that happened while we were all doing our day jobs.
A minute in an ER costs 82 cents. Surgical ICU; $1.43. Orthopedic OR; $12. A terrific piece in the NYTimes about what seems to be a simple question; how do what does it cost hospitals to provide a service, test, or procedure? Turns out that this is an amazingly difficult question. But one hospital system has done pretty impressive work on this – the University of Utah Heath Care system.
This is really, really important, because knowing what things/services/time costs has helped the hospital figure out how to reduce costs and improve care.
What’s amazing is few hospitals have ever tried to do this…
An intriguing story in Insurance Thought Leadership by Valen Analytics’ Bret Shoyer dives into the insurance market cycle question. Shoyer opines that these cycles have been driven not by solid business reasons, but by market over-reaction. Well worth a read. The logic is compelling, the graph more so.
The CDC has announced $20 million in grants to states to encourage those states to “work with insurers to help providers make informed prescribing decisions, and take action to combat this epidemic” according to HHS Secretary Sylvia Burwell. The funds will be used to enhance PDMPs among other services. This is good news indeed; if insurers and PBMs have access to and contribute to state prescription drug monitoring programs, they will be much better positioned to prevent inappropriate dispensing of opioids.
More states considering formularies for workers’ comp (a very good idea); this am’s WorkCompCentral identifies at least a half-dozen that are deep into the process. The list, in an article penned by WCC’s Steve Sadin on North Carolina’s progress towards a formulary, adds SC and NE to the list that previously included CA MT ME TN and LA. OH WA OK and TX currently have formularies.
OK, time to wrap up the week and get ready for the weekend!
There’s been a boatload of health policy stuff out of late – PPACA, pharma pricing, narrow networks – you name it. read all about it here – courtesy of Steve Anderson at MedicareResources.org.
I’m off for a few days; back to work next Wednesday.
Here are a few items of note you may have missed.
First up, thanks to Ohio BWC Pharmacy Director John Hanna who sent me this MedPage piece on medicine in India in response to my post on generic drug pricing (scroll down for the info on pharma). A lot of generic manufacturing is done on the sub-continent; one possible reason generic prices increased over the last couple years has been the FDA’s extreme caution in allowing drugs manufactured in India into the US.
Given the horrifically bad track record of medicine and pharma in India, methinks I’d rather pay a few dollars more for my meds than allow defective drugs into our health system.
Looks like California’s efforts to reform medical delivery for work comp are paying off. CWCI reported medical costs declined from 2013 to 2014 by 5.7% to 7% (depending on valuation point). This is a significant improvement; report author John Ireland attributes the reduction to:
- the phase-in of the RBRVS fee schedule beginning in January 2014;
- the reinstatement of lien filing fees,
- the reductions in ambulatory surgery center fees, and
- the adoption of the IMR dispute resolution process.
Notably cost containment and medical management expenses increased substantially; this is to be expected as the flood of IMR requests.
WCIRB’s Greg Johnson reported similar results (hat tip to WorkCompCentral’s Greg Jones); the rating bureau saw medical costs per claim decrease 4.7% from 2013 to 2014. The change in fee schedule to one based on Medicare’s RBRVS for physician services looks to be one of the main drivers. What’s very interesting (really!) is the percentage of payments going to specialty docs declined last year, while dollars going to general and occ health providers went up significantly.
This is good news; it is entirely consistent with national trends to better compensate primary care providers.
A closely-related item comes from the esteemed Steven Feinberg M.D., one of the most thoughtful physician observers I know. Dr Feinberg provides a template for health care providers seeking to obtain a favorable ruling on a utilization/IMR request.
Another thought-provoking piece about the impact of automation on insurance: an analyst sees a distinct possibility that the auto insurance industry will not exist in 20 years.
Peggy Salvatore is early! Her August edition of Health Wonk Review is up and running here.
This is an insurance- and policy-rich edition, sure to sate your search for sense in the health care system!
Summer is supposed to be slow down time – this one is proving to be anything but.
There are several acquisitions likely to be announced over the next few weeks, one relatively small one as early as today. When I get confirmation I’ll post. A couple are “tuck-ins”, additions that are seen as meshing well with existing businesses and/or add a strategic benefit.
Chris Brigham M.D.’s book Living Abled is getting considerable traction; employers would be well-advised to consider giving copies to injured workers. Another target market would be treating providers, and I’d strongly encourage case management firms to make sure each of their staff gets and reads the book.
The feds have a great effort underway to get input on the best ways to establish work – employment – as a health “outcome” measured by health plans, exchanges, and other stakeholders. This is both long-overdue and very welcome. Sign up and tell ’em what you think!
Exchange enrollment, Health insurance prices, and access to care
Renewals via Exchanges are proceeding apace, with an update from several large states indicating
- enrollee retention is pretty high
- enrollees are doing a lot of shopping around for price, coverage, benefits and networks
- re-determining subsidy eligibility and levels is a challenge as it is based on income data and other information
In California, rates are up by 4% on average, a slight decrease from last year’s 4.2% bump. About 2% of enrollees will have to switch plans if they don’t want an increase of 15% or more; in contrast 20% get good news; their rates all drop.
Overall, folks who shop around will be able to find a plan – in the same tier – for about 4.5% less than they are paying today.
One datapoint on access comes from Michigan, where availability of appointments for Medicaid recipients actually increased after Medicaid expansion. I was surprised to learn that privately insured patients’ access decreased albeit by a very small margin.
Enjoy the weekend, and before you slather on that sunscreen, read this – all that sunblock and sun protection may be doing harm too – it can lead to chronic Vitamin D deficiency, a very bad thing.