Two Minute Drill

Bigger isn’t always better. This study about primary care physician practices proves it.

In primary care, like many other things, bigger isn’t always better. And in the case of primary care physician practices, this study backs it up.

It’s no secret among those who know me well that I have a strong affinity for small businesses and have long held that small and mid-size businesses are the backbone of our country’s economy. In an age of instant gratification where many flip businesses like houses, I find more often than not that it’s the small businesses and their leaders that champion the vision of building and sustaining meaningful companies committed to serving their clients while consistently providing jobs for themselves, their families and others in their communities. And, it’s the small businesses and their leaders that consistently prove to be the innovators.

CommonwealthFund-SmallPrimaryPractices-Aug122014

The study is titled “Small Primary Care Physician Practices Have Low Rates of Preventable Hospital Admissions” and was recently published by The Commonwealth Fund.

This study supports my notion and could also be instructive to you, your family and even your employees when it comes to selecting a Primary Care Physician geared to the combination of the best care AND the best cost…

 “[T]he common assumption that bigger is better should not be accepted without question, at least in practices of 19 or fewer physicians,” the authors conclude. The authors also question the practice of insurers typically paying lower rates to physicians in smaller practices, which typically have no negotiating leverage. Such an approach may well be shortsighted, they say, since the lower preventable admission rates achieved by small practices compared with large groups can mean lower overall costs for patient care…”

Compliance in the Wild West

I wonder how much time and money employers have spent planning on the various dimensions of the Affordable Care Act (ACA) that died on the vine, have been changed, pushed back or remain so cloudy that no one really knows the correct answers. Do you think it’s enough to buy Las Vegas?

Compliance in the Wild West

I have seen so many changes that the only thing I really know is that the guy who tells you how it is all going to look and has the blueprint on EXACTLY what you should do right now is the guy I will bet against –  in Las Vegas or elsewhere.

So what should you do now about how to plan for the future and ensure you are compliant? That’s a very difficult question to answer. Here is what I think you should do:

  1. Don’t cave to fear mongers who say that prisons will be built all over the country to house ACA non-compliers. Compliance is important but so is having the courage to do the right thing for your employees.
  2. Remain aggressive on finding the best ways to take care of your people in the most cost-effective ways. If something is too edgy or pushes the edge of compliance, dump it. The ACA is a really big law and there is some wiggle room to think creatively.
  3. Any part of the law that is 12 months out may change. Avoid spending time on it now. If a brokerage house is hosting a seminar on a five-year plan, attend only if they are serving a fantastic free lunch.
  4. Keep asking good questions. The ACA rests on the understanding that American employers take good care of their people. Employers are going to be the ones to drive the innovation and provide the clear thinking on this law. If employers cave on providing health insurance solutions (even it is just guidance for their people) then the ACA is doomed. You should demand that everyone work hard thinking through the ACA and finding the best options possible.
  5. We have been deeply immersed in work with insurance advisory boards (of which BBG is a member), TPA experts at ODI and the federal regulators. It is believed among some that there will be an uptick in DOL audits. To that end, we at BBG are compiling all of the items an employer will need to provide. It is not a short list but we know what they will ask for and can step in to help. Our goal is to let you run your business and let us help with the things that you don’t do everyday (like provide cert to the DOL). Who knows if the DOL and other agencies will audit more groups, but if they do we will be ready to help.
Bonus (6).  Don’t worry about this stuff in August. Washington is on vacation, so I don’t think they are!

Domino Effect: Challenge to Subsidies Make Mandates and Penalties Endangered Species?

If the healthcare picture wasn’t already muddy enough, now we have more bumps in the road ahead. Most of the press coverage and discussion over this past week has been focused on the subsidy ruling and where that’s headed. And, rightly so.

However, the domino effect may be equally impactful, maybe even more so. Expect the subsidy discussion to broaden and include the legitimacy and relevance of the Affordable Care Act (ACA) imposed coverage mandates and penalties – both for individuals and for employers.

domino effect, dominoes falling

If the subsidies are struck down, even temporarily, it stands to reason that mandates and penalties – both individual and employer – will also be called into question and perhaps disappear.

If in the majority of states subsidies are not available for eligible individuals, then the vast majority of individuals in those states would have no mandate to purchase coverage. It follows then that employer penalties in those states would effectively disappear.

By many accounts, the challenge to the subsidies is headed to the Supreme Court.  Whether or not that really happens is up in the air and still anyone’s guess. If it does, then short of some sort of political resolution (possible but highly unlikely) we will have to wait at least a year or more for resolution. And, all bets would be off on the outcome.

Until then the subsidies remain available and mandates and penalties remain in play.

What does this mean for employers?

A sure signal of plenty more bumps in the in the healthcare road until things settle down with the ACA. Expect plenty of foggy conditions and winding roads under construction before any “new normal” sets in.

Make sure you pick the right driver when it comes to driving your health coverage bus.

Work with people that:

  • Are keenly tuned in to what’s going on;
  • Are savvy in understanding and interpreting your interests;
  • Are not afraid to innovate, and
  • Are nimble enough to help you make the right adjustments as conditions change.

You’ll need them to help you avoid any obstacles in the road, keep your employees protected and make sure the bus keeps traveling in the right direction.

A travesty or a typo?…and its effects on employers

If it were not my job to understand as much as possible about the Affordable Care Act, I would not even take note of the US Court of Appeals decision earlier this week. I promise I won’t be wonky.

Here is what The Washington Post had to say about contradictory rulings this week.

The law was passed in large measure by protecting each State’s autonomy in implementing ACA. All money had to flow to the States, then the States distribute it. That was the intention and much of the sustainability of the fragile support that led to its passage.

What no one expected was for the States (36 of them) to punt on setting up their own exchanges. No exchange, no place to put the money. So, the federal government stepped in and pumped the money into their exchange.

Is the Affordable Care Act in jeopardy?

Is the Affordable Care Act in jeopardy?

At first glance, a reasonable response could be…”What’s the big deal?  A state exchange or federal exchange, who cares?”

However, the law doesn’t allow it.

Amend it? No way will this law be amended (it is toxic for both sides to open up that can of worms).

How will it go down? What happens next?

  1. It will just be accepted as the law that the intentions of ACA are being followed and nothing will happen (legalists should worry about this, because laws should matter). However, this accommodation will keep the ACA train rolling.
  2. Money will be stripped away from the 36 states and subsidies will be lost. It will erase the biggest success so far for the proponents of ACA (making healthcare affordable for low income individuals).

As an employer, what does this mean?

If the subsidies go away, then the whole thing will need to be re-thought. The taxes, fees, community rating and other things that have added cost to employer health insurance were to SUBSIDIZE the exchanges. If the feds can’t subsidize, then why pay these these costs?  Will they go away?

If the subsidies stick, then the options you are considering now (dropping insurance because of the subsidies, especially) will still be an option. The taxes, fees and costs will also keep rolling along.

Sorry, I did get a little wonkish. I guess what I mean to say is that something that appears almost to be a typo in the law is in fact a big problem. Having it out there now as a question mark creates uncertainty for employers (and everybody).

We will do our best to stay on it.

More Clouds on the Horizon: Fate of Obamacare Subsidies Up in the Air

We’ve long contended that it will take years for all the implications of the Affordable Care Act to play out. There’s still so much to be determined and so many factors, moving parts and unintended consequences that will ultimately shape the outcome.

On the heels of last week’s Supreme Court ruling in favor of Hobby Lobby (the court ruled that Obamacare’s contraceptive mandate violates the Religious Freedom Restoration Act with regards to closely held for-profit corporations) looms a series of potentially even more far-reaching court challenges to a major tenet of Obamacare — premium subsidies.

Photo credit: Reuters/John Gress as seen at TheFiscalTimes.com

Photo credit: Reuters/John Gress as seen at TheFiscalTimes.com

The arguments are now at the Appellate Court level and center on very specific language in the Affordable Care Act. The challenges contend that the subsidies cannot be provided to people in states aligned with the federal exchange; and, further, only those who signed up for coverage through the state insurance marketplaces are entitled to subsidies.

Who knows how the courts will rule? If they do rule against the government like they did in the Hobby Lobby case, the potential impact looms large. Only 14 states set up their own insurance marketplaces. 36 other states opted to let the federal government build and run their exchanges.

It will also probably take any rulings that go against premium subsidies as much as a year or more to play out. And, no doubt they will be challenged by the government — all the way to the Supreme Court, if necessary.

One thing’s for sure, any Appellate Court rulings against the subsidies will almost certainly make an already cloudy picture even cloudier.

There have been many challenges to Obamacare — some real, some grasping at straws. This one is garnering some serious attention from both sides of the fence lending credence to the belief that the fate of the subsidies for now could be very much up in the air.

For more details, read Court Challenges Subsidies, Threaten Obamacare and Halbig and King – a Simple Case of IRS Overreach

See our previous article regarding Hobby Lobby: Hobby Lobby Politics-Will The Brand Win or Lose?

Did You Receive an MLR Rebate Check from Your Insurance Carrier?

Wondering What to Do With It?

To comply with provisions of healthcare reform, insurance carriers and health plans have to provide rebates to policyholders if their medical loss ratio – the percentage of premiums spent on reimbursement for medical services and related health care quality activities – does not meet the minimum standards for a given plan year as defined in the Affordable Care Act.

Some employers will be receiving checks this month. If you receive a check and are wondering what to do with it, refer to our primer summarizing key points that may help guide you.

Example Rebate Check

Example Rebate Check

For those of you who want to drill into more technical details go to: http://www.dol.gov/ebsa/pdf/tr11-04.pdf

The IRS guidance on tax implications of the rebates can be found at: http://www.irs.gov/uac/Medical-Loss-Ratio-(MLR)-FAQs

Swedish Retail Giant IKEA – Raising the Bar for US Retailers?

According to an article in The Huffington Post today, Ikea plans to increase the minimum wage for all employees of its US stores, and in doing so, will likely raise the bar for other American retailers.

Well known for their “ready-to-assemble furniture and home goods” Ikea plans to tie wages to MIT’s “Living Wage Calculator.” The calculator tool estimates the base salary a worker needs to make in order to live in a particular geographic area.

The article says that this move by Ikea will boost the average minimum wage to $10.76, a 17% increase, and also means about half of the store’s 13,650 employees will be getting a raise. Rob Olson, Chief Financial Officer and acting president of Ikea US says the rates will go into effect Jan 1, 2015. Olson also told The Huffington Post, “It’s all centered around the Ikea vision, which is to create a better everyday life for the many people.”

Using a living wage calculator to determine salaries based on geographic location seems to be a first for major American retailers. The new minimum wage will vary from $9 to just over $13 among Ikea’s 38 retail stores, plus several distribution and service centers and one manufacturing plant based here in the US.

Olson says the new wage structure is part of Ikea’s effort to attract employees by making its pay and benefits plan more appealing. The company recently expanded its benefits package by increasing the employer match on its 401k plan and launching a separate retirement account for employees that have been with the company for at least five years.

IKEA GIVES HALF ITS US WORKERS A 17% RAISE

The company has decided to focus solely on the co-worker, rather than follow the lead of the competition – other US retailers. Bold move. The article goes on to point out, however, that Ikea is not the only retailer to raise wages across the board for its employees. Gap Inc. announced earlier this year that it would raise wages affecting more than two thirds of its 90,000 workers.

As the article points out, this will undoubtedly become a talking point as the national debate heats up over increasing the federal minimum wage, currently $7.25 per hour. It hasn’t been raised since 2009. Olson asserts that Ikea’s decision should not be read as an endorsement of any legislative proposals regarding minimum wage.

Read the full article, Ikea To Raise Minimum Wage For U.S. Workers With Tie To Living Wage Calculator

Wondering How Long You Can Keep Your Pre-2014 Plan?

The answer: Probably at least through 2017. The time table for small employers still offering a health plan issued prior to 2014 (and technically doesn’t comply with all the provisions of the Affordable Care Act) could extend well into 2017.

In March, the Obama administration released guidance extending the renewal of health insurance policies that don’t meet all the ACA standards through October 1, 2016. This means that health policies that exist today, but do not comply with ACA provisions that went into effect in 2014, can be maintained through 2017.

It’s up to the individual states and respective insurance companies to adopt the extension.  Those states (all but a handful) that have chosen to allow carriers to renew non-compliant policies for policy years starting after January 1 of this year are likely to adopt the extension.

To read more about this extension go to The Extended “Fix” for Cancelled Health Insurance Policies: Latest State Action on the The Commonwealth Fund Blog.

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