Compliance Recap July 2018

July was a quiet month in the employee benefits world. The Internal Revenue Service (IRS) released draft Forms 1094-B, 1095-B, 1094-C, and 1095-C. The IRS also released an information letter on the employer shared responsibility provisions.

UBA Updates

UBA released two new advisors:

UBA updated existing guidance:

IRS Releases Draft Forms 1094-B, 1095-B, 1094-C, and 1095-C

The Internal Revenue Service (IRS) released draft Forms 1094-B, 1095-B, 1094-C, and 1095-C. Employers will use the final version of these forms to report on offers of health coverage to full-time employees and their family members, and enrollment in health coverage by employees and their family members (for employers that sponsor self-insured health plans).

There are no substantive changes to draft Forms 1094-B, 1095-B, or 1094-C for 2018. There is a minor formatting change to draft Form 1095-C for 2018. There are dividers for the entry of an individual’s first name, middle name, and last name.

Employers will have more information about any additional changes to these forms when the IRS releases its draft instructions for these forms.

IRS Releases Information Letter on Employer Shared Responsibility

The Internal Revenue Service (IRS) released its Information Letter 2018-0013 to reiterate how the employer shared responsibility provisions would apply to an applicable large employer. Specifically, the IRS explained how the Service Contract Act (SCA) interacts with the Patient Protection and Affordable Care Act (ACA).

As background, the SCA requires workers who are employed on certain federal contracts to be paid prevailing wages and fringe benefits. An employer generally can satisfy its fringe benefit obligation by providing the cash equivalent of benefits or a combination of cash and benefits. Alternatively, an employer may permit employees to choose among various benefits, or various benefits and cash. An employer may choose to provide fringe benefits under the SCA by offering an employee the option to enroll in health coverage provided by the employer (including an option to decline that coverage). If the employee declines the coverage, that employer would then generally be required by the SCA to provide the employee with cash or other benefits of an equivalent value.

This Information Letter refers to IRS Notice 2015-87 which describes how the ACA and the SCA may be coordinated for plan years beginning before January 1, 2017, and until further guidance is issued and applicable. Notice 2015-87 clarifies that, for employees under the SCA, the choice of a cash-out payment will generally not require an employer to pay a greater share of the cost of the health coverage for the coverage to be considered affordable.

Question of the Month

  1. What if a plan sponsor fails to file or pay the PCORI fee?
  2. Although the PCORI statute and its regulations do not include a specific penalty for failure to report or pay the PCORI fee, the plan sponsor may be subject to penaltiesfor failure to file a tax return because the PCORI fee is an excise tax.

The plan sponsor should consult with its attorney on how to proceed with a late filing or late payment of the PCORI fee. The PCORI regulations note that the penalties related to late filing of Form 720 or late payment of the fee may be waived or abated if the plan sponsor has reasonable cause and the failure was not due to willful neglect.

If a plan sponsor already filed Form 720 (for example, for a different excise tax), then the plan sponsor can make a correction to a previously filed Form 720 by using Form 720X.


Employers take steps to address opioid crisis

Employers are seeking ways to address the nationwide opioid crisis. Read on to learn how employers are working with their health plan and pharmacy benefit managers to address this issue.


President Donald Trump declared the nation's opioid crisis a "public health emergency" last month, underscoring employer concerns about this growing epidemic.

The opioid crisis cost the U.S. economy $95 billion in 2016, and preliminary data for 2017 predict the cost will increase, according to a new analysis from Altarum, a health care research and consulting firm. Addressing opioid misuse could lead to more productive workers and lower health care costs.

U.S. employers are increasingly seeking ways to reduce the abuse of prescription opioids, according to new findings from the Washington, D.C.-based National Business Group on Health (NBGH), which represents large employers.

NBGH's Large Employers' 2018 Health Care Strategy and Plan Design Survey found that the vast majority of big employers (80 percent) are concerned about abuse of prescription opioids, with 53 percent stating that they are very concerned. Thirty percent have restrictions for prescription opioids, and 21 percent have programs to manage prescription opioid use.

The survey was conducted between May 22 and June 26, and reflects the strategies and plan offerings of 148 U.S. employers, two-thirds of which belong to the Fortune 500 or the Fortune Global 500.

"The opioid crisis is a growing concern among large employers, and with good reason," said Brian Marcotte, NBGH president and CEO. "The misuse and abuse of opioids could negatively impact employee productivity, workplace costs, the availability of labor, absenteeism and disability costs, workers' compensation claims, as well as overall medical expenses."

Given the widespread nature and expanding scope of the opioid crisis, some employers are working directly with their health plans and pharmacy benefit managers (PBMs) to address the issue, the survey showed. Those that are working to manage opioid use most often use the following strategies:

  • Limiting the quantity of pills on initial prescriptions for opioids.
  • Limiting coverage of opioids to a network of pharmacies and/or providers.
  • Expanding coverage of alternatives for pain management, such as physical therapy.
  • Providing training in the workplace to increase awareness and recognition of signs of opioid abuse.
  • Working with their health plans to encourage physicians to communicate about the dangers of opioids and to consider alternatives for pain management.

Apart from these measures, employers are:

  • Increasing communications and training for managers and employees to raise awareness of the issue.
  • Identifying people who may be at risk for addiction who could benefit from help.
  • Encouraging employees to take advantage of an employee assistance program, the health plan and other resources for help and treatment.

Different Pain Management Approaches

Janet Poppe, senior director for payer and employer relations at Pacira Pharmaceuticals, based in Parsippany-Troy Hills, N.J., advises using a multitherapy pain management strategy to minimize opioid use—especially following surgery, which she called "the gateway to the opioid epidemic."

"Opioid monotherapy is the current standard of care for postsurgical pain management," Poppe said on Nov. 14 at the National Alliance of Healthcare Purchaser Coalitions' 2017 annual conference, held in Arlington, Va. She cited research showing that:

  • 92 percent of postsurgical patients who receive opioids for acute pain report adverse side effects such as urinary retention or respiratory depression, the treatment of which can be costly.

In another study, more than 10 percent of patients who were prescribed an opioid within seven days of surgery were identified as long-term opioid users one year after surgery. Other research shows that 1 in 15 patients who receive an opioid post-surgery become chronic users.

Local anesthetics, anti-inflammatory drugs and nonopioids such as sodium-channel blockers are among the options available to address pain without the addictive and debilitating effects of opioids, Poppe said. "Using two or more nonopioid pain relievers that act on the body in different ways can produce a better result, at a lower cost, than using opioids."

"There is a need to generate widespread public awareness of the role that postsurgical opioids play in the larger public health crisis in the U.S.," Poppe noted. Health plan sponsors should work with their insurers or third-party administrators to alleviate the risks associated with opioid dependence by encouraging nonopioid pain-management approaches, she advised. Employers can:

  • Cover and demand opioid-free options for employees.
  • Ask provider networks what they are doing to reduce opioid use post-surgery.
  • Educate employees about discussing alternative pain strategies with their doctor. Pacira'sPlanAgainstPain website offers resources.
  • Change benefit designs to steer employees to surgeons and facilities using alternatives to opioids

"To stem widespread opioid abuse, state actors and employers must urge insurers to remove barriers to care, including prior authorization for medication-assisted treatment (MAT) and nonopioid treatments for pain management," Caleb H. Randall-Bodman, a senior analyst for public affairs with Forbes Tate Partners in Washington, D.C., said in an e-mail.

"Patients, especially those in great need, will take the most affordable and accessible treatment available. As such, the epidemic will not end until patients have access to 1) affordable, comprehensive pain management, and 2) comprehensive treatment for substance use disorders," said Randall-Bodman, who works with the American Medical Association's taskforce to reduce opioid abuse.

SOURCE: Miller, S (28 November 2017) "Employers take steps to address opioid crisis" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/steps-to-address-opioid-crisis.aspx


How employers can manage the skyrocketing cost of specialty drugs

Since the 90's, the number of specialty medications, not to mention their costs, has grown exponentially. Continue reading to learn what employers can do to manage these costs.


In the past two decades, the number of specialty medications — which treat rare and complex diseases such as multiple sclerosis, pulmonary arterial hypertension, hepatitis C, HIV, cystic fibrosis, some types of cancer and hemophilia — has grown exponentially. In 1990, there were only 10 specialty drugs on the market. By 2015, that number had increased to 300 medications, and by the end of 2016 there were approximately 700 more specialty drugs in development.

These medications are usually very high cost, with some new biologic medications costing more than $750,000 a year. Why are the costs so high? There are a number of factors, including the facts that distribution networks are limited, these medications are complicated to develop and distribute, and there are few, if any, generic alternatives for these drugs.

See also: A Look at Drug Spending in the U.S.

The Pew Charitable Trusts found that although only 1% to 2% of Americans use specialty medications, they account for approximately 38% of total drug spending in the U.S.

So, how can employers better gain control over the cost of specialty medications? Because there are hundreds of specialty medications, there’s no single strategy for cost management that can be applied universally. To build an effective cost management strategy, employers need to first analyze employee use of specialty medications. The best strategy will approach specialty medication management by disease class and drug by drug.

However, there are key building blocks of a strategy that will both manage costs and ensure that employees have access to the medications they need. Here are six things employers can do.

Assess benefit plan design structure. Employers should consider how they are incenting employees to spend their benefit dollars appropriately and wisely. A multi-tiered medication formulary where employees pay less out of pocket for generic drugs and lower cost medications and more for costly medications is one approach that’s proven effective. To help employees afford these higher out-of-pocket costs, employers can promote manufacturer copay savings programs, which many drug makers offer.

Think about utilization management. This can include requiring prior authorization for high-cost specialty medications and step therapies (employees must start with lower cost therapies and can move up to more costly ones if those are not effective).

Consider a custom pharmacy network design. By narrowing the network of pharmacies that fill specialty medication prescriptions, employers can negotiate a better unit price. A freestanding specialty pharmacy or a pharmacy benefits manager can provide savings by optimizing discounts for both employers and employees.

Offer second opinion and other support services for rare and complex diseases. A newly diagnosed rare or complex disease patient will see, on average, seven different specialists over the course of eight years before getting a true diagnosis and appropriate treatment path. These programs aim to reduce that burden and ensure success with that treatment once it’s identified. A second opinion from a top specialist in the field provides an expert assessment of the diagnosis and recommendations on the most effective treatment protocol. This not only helps manage costs, it lowers the risk of misdiagnosis and inappropriate treatment. Additional case management services can include one-to-one counseling and, when the drug regimen requires, in-home nursing services to help patients better manage their disease and improve outcomes.

See also: Specialty Drugs and Health Care Costs

Offer site of care choices. Where specialty drugs are administered can have a significant impact on what they cost. Medications administered in an outpatient clinic at a hospital can cost five times as much as those that are injected or infused in a physician’s office or at the patient’s home. Offering services such as home infusion or injection delivered by nurses or incenting patients with lower copays when they receive their medications at their physician’s office can lower overall specialty drug costs.

Educate employees. When an employee or covered family member is diagnosed with a rare or complex condition that will require a higher level of care and the use of specialty medications, employers can connect employees with case managers or similar services that provide education about the condition and the medication, such as how to manage side effects or what alternative medications are available, which can increase employee adherence with the medication regimen.

SOURCE: Varn, M (8 August 2018) "How employers can manage the skyrocketing cost of specialty drugs" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/specialty-pharmaceuticals-and-how-employers-can-manage-cost


Hierl has Heart for Fond du Lac Humane

Here at Hierl Insurance, we strongly believe in giving back to our community. This August and September, we have partnered with Fond du Lac Humane Society, our local animal shelter. Throughout the month of August we are hosting events and taking donations, all to benefit our local humane society. Then in September, we will host a Paws for Cause 5k benefiting Fond du Lac Humane Society! If you’re looking for a family-friendly event, then sign up at http://www.pawsforacause5k.run/ today!

Stay tuned for photos and updates on all of the fun! You can view a list of activities below:

August:

  • Hierl Yappy Hour and Dinner
  • DIY Toy Making for Fond du Lac
  • Lucky Dog Bingo

Sign up and save animals!

Paws for a Cause 5k

September:

Paws for a Cause 5k run/walk

Please join us for the Paws for a Cause 5k run/walk on September 22, 2018, 8:30 a.m. – 12:00 p.m.  Registration starts at 8:30 a.m. and the run starts promptly at 10:00 a.m.  We are looking for Hierl team members, along with any family/friends, to join us for a 5K that you and your dog can participate in.  The event will be held at Red Cabin at Green Acres and is being sponsored by Tito’s vodka.

There is something for everyone:

  • Experienced runners can compete for the overall best time or best time within a specific age group.
  • The course can be walked alone or with a group.
  • Dogs are welcome to walk or run with you, however, they must be leashed at all times.

All participants will receive a finisher’s medal, t-shirt, and other great Tito’s gear!  Please keep in mind, if you are not able to participate, you can sign up as a VIRTUAL Participant!  You run or walk the 5K on your own time but still receive the finisher’s medal, t-shirt, and other goodies.  How cool is that!?

Registration information:

  • General Registration thru 09/08/2018 – $37 (No Additional Fees)
  • Virtual Registration thru 09/21/2018 at 3:00 PM – $40 (No Additional Fees)
  • Late Registration thru 09/21/2017 at 3:00 PM – $42 (No Additional Fees)
  • Race Day Registration beginning at 8:30 – $45 (No Additional Fees)


Everything benefits managers need to know about Generation Z

Say hello to Generation Z. Yes, they have some similarities to Millennials, but they have they own thoughts and attitudes when it comes to work and benefits. Read this blog post to learn more.


Just when you thought you had finally figured out the millennial generation, there’s another young cohort of professionals entering the workforce. Sure, they’ve got some similarities to tech-focused millennials, but they have plenty of their own attitudes and opinions about money, relationships and, of course, work and benefits. Meet Generation Z.

Generation Z was raised in a post-9/11 world, following the dot-com boom and bust and during the midst of the Great Recession. There’s no doubt that these world events have colored the way they think and the way they work. Generation Z is a large cohort of about 72.8 million people and about 25% of the population. It’s a generation that employers will need to understand to create meaningful relationships. Here’s what you need to know.

They’re true digital natives. Generation Z was born between the 1995 and 2010, which makes them the first truly digital native generation. By the time they were heading off to Kindergarten, the internet had reached mainstream popularity and Mark Zuckerberg had already launched Facebook across college campuses.

Like many of us, Generation Z is rarely without their phones. But unlike your older colleagues, Generation Z may be more connected than ever — documenting their days on Instagram Stories and Snapchat, and messaging friends by text and other messaging platforms.

However, they’re also a relatively private bunch. Rather than broadcasting their lives on Facebook (like their parents, aunts, uncles and grandparents), they favor networks that allow for privacy. Snapchat snaps disappear, as do Instagram Stories. Gen Z also gravitates toward apps like Whisper, an anonymous social network for sharing secrets.

Here’s the takeaway for HR pros: Rather than seeing this as a barrier to communication, look at it as an opportunity. Try using text message reminders for open enrollment deadlines or creating a Slack channel for benefits communication, in addition to email and paper updates.

They’re seeking financial security. Generation Z grew up during the Great Recession, during which they may have seen their parents lose their jobs or deal with serious financial hardships. Because of this, Generation Z is focused on financial stability.

Unfortunately, many Gen Zers may join your company drowning in student loan debt from college. Consider offering benefits that help them get out of debt and begin saving for the future. Student loan debt repayment benefits with platforms like SoFi or Gradifi provide appealing avenues to pay off debt faster. You can also promote tax-deferred savings programs such as a 401(k) or health savings accounts to minimize their tax liability and maximize savings opportunities. These benefits may also appeal to millennials struggling with student loan debt and the prospect of saving for retirement — all while they start families.

Financial wellness benefits are attractive to all of your employees — Gen Z included. Consider partnering with local banks or credit unions to provide other savings options and financial education. Make this education appealing to everyone by providing it in different formats — in-person for anyone to attend, as well as on-demand webinars or Skype meetings for those who appreciate a more interactive experience.

Gen Z wants to actively participate. Generation Z is the most connected generation yet; they’re used to Googling an answer before you can finish your question or chatting with their friends throughout each day.

This hyper-connectedness lends itself to more interactive workplace meetings. Keep your Gen Z employees engaged and garner feedback by incorporating polls into your meetings, or creating recordings and presenting to computers and smartphones using a platform like ZeetingsPresentain or Mentimeter.

Whereas millennials were known for their interest in collaborating with each other, Gen Z wants to own their work a little bit more and compete against colleagues. Use this to your advantage to introduce gamification into your programs. Platforms such as Kahoot cannot only help you create some fun competition, but it can improve information retention.

They have a surprising communication preference. We’ve established that Generation Z is a hyper-connected cohort. But research uncovered one surprise about this generation’s preference for feedback: they prefer to be in-person. Use this knowledge to mentor your managers who will deliver feedback, and use it to make your benefits more appealing, too. For example, a confidential advocacy program with phone, email and chat options can be a great source for Gen Zers who want more information on their benefits.

While not everyone in this age group will conform to these attitudes and feelings, it can be helpful to pull back the curtain and understand how this generation could be different from millennials, Gen Xers and baby boomers.


3 ways to promote inclusion in your workplace

How can employers promote inclusion in their workplaces? In this article, Li talks about three ways employers can promote inclusion.


Diversity and inclusion is top of mind for HR practitioners and employees alike. If we think about diversity as who is walking through the door, then inclusion would be the next part of the employee experience. With the recent focus on workplace diversity trends, it’s important to not forget how important it is to create an inclusive working environment.

It’s critical to facilitate relationship building with new hires and their teams. We often focus on the work to be done without taking time to get to know our co-workers as individuals. When we see each other as people and learn to appreciate our similarities and differences, it makes it easier for everyone to thrive.

Whether you’re looking to grow your current inclusion practices or are starting from scratch, try these three action items:

1. Don’t be afraid to ask.

It may sound simple, but a great first step to improving inclusion is to survey employees. By conducting quick and easy “pulse” surveys, you can gauge the level of belonging that employees feel. You can do this by launching survey focused on diversity or add questions around inclusion and belonging into your existing employee engagement surveys. Once you have a baseline on company sentiment, you can begin to improve areas that may be lacking. Start to put in place mechanisms to support individuals from different backgrounds and don’t forget to conduct these surveys on an ongoing basis.

2. New Hire Buddies

Whether you’re an introvert, extrovert, or somewhere in between, it can be hard to meet new people when you start a new job. Consider creating a “buddy” program to encourage new hires to bond with their co-workers. Companies hit roadblocks when they put the onus on new employees to reach out and engage with their teams. Having the support of a “buddy” at work helps create a feeling of security, which leads to greater engagement. The more engaged your employees are, the longer they will want to stay with your company.

3. Resource Groups

Employee resource groups (ERGs), sometimes also called affinity groups, serve as a platform that employees can use to build a culture of inclusion and belonging. Not only do they foster a sense of community within your organization, they also help new hires transition into their new working environment. These groups create opportunities for education and understanding between diverse individuals across your company. They can also be a great launchpad for new ideas and change in creating more inclusive policies and practices.

Fostering an inclusive company culture helps increase both engagement and retention. The better an employee feels about working at your organization, the greater the likelihood that they will reach their full potential on the job. Measure your current state of inclusion with regular pulse surveys and follow up with making changes as necessary to foster stronger relationships across the organization.

Source: Li, J. (19 July 2018). "3 ways to promote inclusion in your workplace" (Web Blog Post). Retrieved from https://blog.shrm.org/blog/3-ways-to-promote-inclusion-in-your-workplace


Meeting cybersecurity risks head-on: A guide to breach preparedness

How would you manage a data breach? No company is immune to cyberattacks and data breaches. Read on to learn how you can prepare your business.


Gauging a company’s true data breach risk from the outside is a difficult endeavor for insurers, with challenges both technical and informational. But even less attention has been paid to how companies would manage a breach if it happened, which has an enormous impact on the toll of the final damage.

See also: Analyze Your Risks with Hierl's Cyber Security Advisors

No organization is immune to breach. If the National Security Agency can lose data, anyone can lose data, yet the scope of the current issue is still astounding.

According to another insurance company's 2017 cyber readiness report, 72% of large U.S. businesses — nearly three out of four — and 68% of small- and mid-sized businesses — about seven in ten — reported cyber incidents in the previous year. Among these, close to half (47%) experienced two or more cyber incidents during that same time.

The largest breaches, affecting big-name companies like Equifax, Target, Home Depot and many others, drew substantial headlines because of the huge number of identities involved. But almost every business holds some sensitive information, either regarding its customers or its own intellectual property, finances or employees. In fact, smaller organizations often lack the internal resources to dedicate towards preparedness, making them very attractive targets for hackers.

Assessing the threats to your business

The first challenge with measuring a company’s risk exposure relates to the industrywide problem of tying compliance and policy to actual security. A company may have checked all the right boxes on paper, but doing so guarantees little about their actual cyber risk position.

The second issue is that people often matter much more than technology.

The public conversation focuses on high-profile hacking events, but data breaches are even more likely to be the result of internal issues, including breakdowns in training, procedure or plain old mistakes.

The overwhelming majority of all cyber attacks are successfully executed with information stolen from employees who unwittingly give away their system ID and access credentials to hackers or provide a gateway via a malware link embedded in some form of communication.

One of the most important components of an effective data breach readiness program is mandatory and frequent training to remind employees about the importance of security awareness.

See also: Your Cyber Liability Policy & Handling Data Breaches Like A Pro

Education information security best practices can help arm a team against threats such as phishing, man-in-the-middle attacks, malware, and ransomware, substantially lowering the long-term risk.

An accurate understanding of a company’s sector-specific risks is another important point of departure in corporate cybersecurity. Healthcare employees, for instance, need to be especially on guard for EHR-related attacks and RDP server breaches, like the ones instigated by the SamSam virus (which took down Allscripts last month).

Other industries are more vulnerable to loopholes in common business apps; still, others are more frequently victims of point-of-sale malware or e-mail phishing scams. Once businesses understand where and how they are most likely to be targeted, they can begin providing training that takes into account the need for added vigilance in these specific areas.

The final challenge in correctly identifying breach risk involves understanding the extent to which recovery costs can vary. Discrepancies in cost depend not only on the severity of the breach, but also on how well the organization responds. Globally, the average cost to recover from a security breach is $158 per impacted individual, but that varies from of $60 to $400 per person.

While more companies than ever before are now either considering or have taken out some form of cyber insurance, this should not be considered an unloadable risk. Smart organizations are increasingly focusing on proactively identifying data breaches and preparing to efficiently react to them in advance of a data breach crisis.

Proper preparation means more education

The most devastating impacts of a data breach can only be avoided by coupling breach awareness and prevention efforts with readiness and response planning ahead of a cybersecurity incident.

Comprehensive breach readiness plans break down both pre-emptive and retrospective action steps by department: it’s sensible, for example, to task IT personnel with monitoring cloud connectivity and identifying network loopholes while entrusting financial staff with detecting suspicious activity along company bank and credit accounts.

Customer relations experts and account managers, on the other hand, are likely the best resources for overseeing client communications during and after a data breach, helping to re-establish trust and informing their consumer-facing workforce.

Here, inter-departmental communication is paramount: all workers should understand how and to whom they are to report possible breaches or scams, and when such breaches occur, the entire company should know what to expect employees in every department to do next.

Even for the most cyber-savvy corporations, however, internal resources alone are not enough these days. Outside resources are often critical to mitigating the threat of cyber attacks; Stop them once they start and restore company functions in a breach’s aftermath.

Establishing relationships and negotiating agreements with external subject matter experts is better done far in advance of an actual data breach. Contractual terms can be negotiated without the chaos and urgency of a crisis situation. The same is true for interfacing with law enforcement and regulatory agencies.

Knowing whom to contact and having an established communication chain can pay off when trying to execute an urgent data breach response.

See also: 5 Ways to Spot a Phishing Email

Both internally and externally, the human element of cybersecurity remains a business’s best defense across an ever-widening threat landscape. With the right planning and a rapid response team, companies should be able to withstand a breach with the least damage possible, limiting losses – and claims.

SOURCE: Thompson, J. (2 March 2018) "Meeting cybersecurity risks head-on: A guide to breach preparedness" (Web Blog Post). Retrieved from https://www.propertycasualty360.com/2018/03/02/meeting-cybersecurity-risks-head-on-a-guide-to-bre/


What do the DOL’s new AHP rules actually mean?

Do you understand the Department of Labor's (DOL) new rules on Association Health Plans (AHP)? Continue reading to learn what they mean and when they go into effect.


President Trump signed an Executive Order on October 12, 2017 directing the U.S. Department of Labor to consider ways to make it easier to form an Association Health Plan by expanding existing membership rules. After issuing proposed regulations in early 2018 and considering public comments, the DOL issued a set of final regulations intended to make it easier to form AHPs on June 18, 2018.

The final regulations do not replace the existing AHP rules. Instead, they create a three-tier AHP system referred to in this article as the:

Narrow Standard AHP: These AHPs are available under the existing rules, but they can be difficult to form.

Relaxed Standard AHP: These AHPs are created by the new regulations. They are easier to form than a Narrow Standard AHP and can allow self-employed individuals to participate, but they do not allow as much flexibility in terms of plan design and underwriting (discussed in the chart below under “Plan Design and Underwriting”).

Non-Conforming AHPs: These are AHPs that do not meet either the Narrow or Relaxed Standards. We’ll touch on these briefly at the end of this article.

What are the Pros and Cons for Narrow and Relaxed Standard AHPs?

Pros:

  • The combined membership of the member employers may enable the AHP to self-insure
  • Qualify as single employer group health plans for ERISA and other purposes, enabling many fully-insured AHPs to qualify as a large group insured plan based upon the number of covered lives
  • Self-insured and large group insured AHPs are able to avoid certain requirements applicable to small group and individual plans under federal and state law, including:

o The requirement to offer all essential health benefits (EHB) mandated by a state’s EHB package (the AHP will still have establish a reasonable definition for EHBs such as selecting a benchmark plan); and

o Community rating requirements. This may enable AHPs to offer less expensive coverage alternatives to member employers as well as greater flexibility when setting premiums (but see “Plan Design and Underwriting” in the chart below)

  • Greater buying power than individual member employers may have on their own
  • The AHP’s risk pool may be more favorable for smaller employers than the community rating in their applicable small group market(s)

Cons

  • Not appropriate for many potential member employers and should be carefully evaluated on a case-by-case basis
  • Do not avoid state regulation, even if self-insured
  • Require a strong ongoing commitment to participate from member employers as turnover can cause AHPs to quickly fail
  • Insurance carriers may be reluctant to insure AHPs that do not meet certain criteria established by the carrier (e.g. The insurance carrier may require a closer relationship between the member employers than the AHP rules require)

AHP odds and ends

AHPs are generally subject to the reporting and disclosure requirements applicable to the underlying benefits, which may include providing summary plan descriptions, summaries of benefits and coverage, and Form 5500 filings. The DOL is still working out how certain other requirements may apply to AHPs. For example, the DOL indicated that existing HIPAA wellness rules apply to AHPs and the Mental Health Parity and Addiction Equity Act will apply if the member employers of the association have at least 50 employees in the aggregate, but the DOL is still considering how COBRA may apply and intends to issue additional guidance addressing this.

Many AHPs will not qualify as Narrow Standard or Relaxed Standard AHPs, typically because the association fails to meet the formation requirements described above. These Non-Conforming AHPs can still provide the advantages of greater purchasing power and the ability to separately experience-rate member employers like Narrow Standard AHPs, but Non-Conforming AHPs do not qualify for single employer plan treatment and are instead viewed as a separate plan maintained by each member employer. As a result, many member employers will still be subject to the small group and individual plan requirements that Narrow Standard and Relaxed Standard AHPs can avoid.

Effective dates

There are three phase-in effective dates under the final regulations:

  • Sept. 1, 2018: New or existing associations may establish a fully-insured Relaxed Standard AHP
  • Jan. 1, 2019: AHPs in existence on or before June 18, 2018 may establish a self-insured Relaxed Standard AHP.
  • April 1, 2019: All other new or existing associations may establish a self-insured Relaxed Standard AHP.

There are no effective dates specific to Narrow Standard or Non-Conforming AHPs as these existed before the final regulations and are not directly affected by them.

Source:

Beinecke, C. (19 July 2018). "What do the DOL’s new AHP rules actually mean?" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/what-dol-ahp-rules-actually-mean


Reference-based pricing is gaining momentum — here’s why

Reference-based pricing has made its comeback. Continue reading to learn what reference-based pricing is and why it is slowly gaining momentum.


In my 25 years in the insurance business I’ve seen many changes. But there’s always been one constant: Healthcare and pharmacy costs continue to accelerate and no regulatory action has been able to slow this runaway train. The problem is that we have focused on the wrong end of the spectrum. We don’t have a healthcare issue; we have a billing issue.

At the root of this national crisis is a lack of cost transparency, which is driven by people who are motivated to keep benefit plan sponsors and healthcare consumers in the dark. Part of the problem is that most cost-reduction strategies are developed by independent players in the healthcare food chain. This siloed approach fails to address the entire ecosystem, and that’s why we continue to lament that nothing seems to be working.

But that could change with reference-based pricing, a method that’s slowly gaining momentum.

Here’s how it works.

Reference-based pricing attacks the problem from all angles and targets billing — which is at the heart of the crisis.

Typically, a preferred provider organization network achieves a 50-60% discount on billable charges. However, after this 50-60% discount, the cost of care is still double or triple what Medicare pays for the same service. For example, the same cholesterol blood test can range from $10 to $400 at the same lab. The same hospitalization for chest pain can range anywhere from $3,000 to $25,000.

Reference-based pricing allows employers to pay for medical services based on a percentage of CMS reimbursements (i.e. Medicare + 30%), rather than a percentage discount of billable charges. This model ensures that the above-mentioned hospitalization cost an employer $3,000 rather than $25,000.

“Negotiating” like Medicare

Reference-based pricing is becoming increasingly popular as more organizations consider the move to correct cost transparency issues as they transition from fully-insured to self-funded insurance plans.

One well-known and considerable example is Montana’s state employee health plan. The state employee health plan administrator received a notice from legislators in 2014 urging the state to gain control of healthcare costs. Instead of beginning with hospitals’ prices and negotiating down, they turned to reference-based pricing based on Medicare. Instead of negotiating with hospitals, Medicare sets prices for every procedure, which has allowed it to control costs. Typically, Medicare increases its payments to hospitals by just 1-3% each year.

The state of Montana set a reference price that was a generous 243% of Medicare — which allowed hospitals to provide high-quality healthcare and profit, while providing price transparency and consistency across hospitals. So far, hospitals have agreed to pay the reference price.

Of course, there is still the risk that a healthcare provider working with the state of Montana health plan, or any other health plan using reference-based pricing, could “balance bill” the member. But a fair payment and plenty of employee education about what to do if that happens could help you curb costs.

If balance billing does occur, many solutions include a law and auditing firm to resolve the dispute. In one recent example, a patient was balance billed almost $230,000 for a back procedure after her health plan had paid just under $75,000. An auditing firm found that the total charges should have been around $70,000, and a jury agreed. The hospital was awarded an additional $766.

Reference-based pricing is a forward-thinking way to manage costs while providing high-quality benefits to your employees. It’s one way to improve cost transparency, which may eventually transform the way that we buy healthcare.

Kern, J. (18 July 2018) "Reference-based pricing is gaining momentum — here’s why" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/reference-based-pricing-health-insurance-gaining-momentum?utm_campaign=intraday-c-Jul%2018%202018&utm_medium=email&utm_source=newsletter&eid=1e52d1873f9d2e8d6bd477da3e7f49a3


How tech solutions can take aim at employee stress

Are your employees stressed? Stress can lead to multiple health conditions and many people cope with stress in unhealthy ways. Continue reading to find out how employers can help reduce stress in the workplace.


In case you haven’t noticed, today’s workforce is completely stressed out. Overwhelming workloads, looming deadlines and the 24/7 always-on mentality is becoming the corporate America norm. Unfortunately, long-term stress can contribute to everything from heart disease to strokes, cancer and other grave conditions. Stressed employees also are more likely to be unmotivated, quit their jobs, perform poorly and have low morale and higher incidence of illness and accidents.

Because everyone copes with stress differently, some deal with it in unhealthy ways, such as overeating, eating unhealthy foods, smoking cigarettes or abusing drugs and alcohol, according to the American Psychological Association. This vicious cycle makes stress one of the top health concerns, with 49% of individuals at risk for stress-related illnesses, second only to weight, which impacts 69% of individuals, according to internal research.

All in all, employee stress is causing employers … well, stress. In fact, the cost of work-related stress in the US is $300 billion annually, according to the American Institute of Stress. Further, behavioral-related disability costs have increased more than 300% in the past decade and account for 30% of all disability claims.

While more than two-thirds of US corporations have adopted some kind of health and wellness program, the majority doesn’t adequately address or even include solutions that support mental health. That’s why it’s critical to educate employers on the real cost of stress and the benefits of an effective stress-related wellness initiative to help keep health costs down, while keeping employee productivity and retention up.

However the realities of promoting a healthy balance for employees, while simultaneously ensuring the delivery of quality work that’s completed on time, is much easier said than done. Anecdotally, we often hear that employees don’t feel they are benefiting from their corporate wellness plans because they don’t have time or they can’t break away from their desks.

Walk the walk
What can employers do to break the cycle? First and foremost, stress reduction starts from the top-down as management and bosses play a key role in employee adoption and lasting engagement. Not only are they responsible for communicating about available resources, they need to literally and figuratively walk the walk. When leadership incorporates stress management into their own lives, employees understand the company's commitment to these practices and feel more comfortable taking a break.

The role of technology
Some of the most effective wellness programs leverage a variety of technologies that offer something for everyone and makes it easier for employees to engage and benefit, regardless of where they are or the time of day. Popular technology-based solutions include:

· Digital health platforms — Connecting employees to health coaches, board-certified physicians, and colleagues who can provide support for those dealing with stress and offer guidance with chronic disease resulting from, or adding to, individuals’ stress levels.
· Digital health games — Employees receive encouragement and rewards through fun, engaging games in which they compete against others in stress-busting exercise to reach health goals.
· Wearables — Employees can sync popular wearable devices, such as their Apple Watch, to visualize the impact of guided meditations on their heart rate. Through smart feedback, employees can better understand which meditation exercises, locations, and times of day have the greatest impact on their heart rate, and therefore, stress level.
· Virtual Reality guided meditation — Combining an immersive VR with mindfulness meditation can help transport employees to relaxing environments, bringing a whole new dimension to the meditation experience. Using apps on their cell phones and portable VR headsets, employees are able to practice meditation from any place, at any time. In addition to stress reduction, a growing body of scientific evidence suggests that meditation can heighten attention spansimprove sleepreduce chronic pain and fight addictions like drug and alcohol abuse, and binge eating.

The bottom line: Stressed-out employees can have significant health and financial consequences for your clients. With the start of open enrollment season just a few short months away, it’s time to start educating your customers about the benefits of incorporating mental health programs, like digital health platforms and meditation, into their corporate wellness plans to mitigate employee stress and improve productivity.

Miller, M. (11 July 2018) "How tech solutions can take aim at employee stress" (Web Blog Post) Retrieved from https://www.employeebenefitadviser.com/opinion/mental-fitness-why-your-corporate-wellness-portfolio-needs-mental-health-solutions